According to Kay (2010) a microeconomist speaks about what causes the price of particular products to fluctuate. On the other hand, a macroeconomists talks about things like inflation, what the target interest rate should be, what influences employment and unemployment (Kay, 2010).
Microeconomics studies the decision of consumers and firms with respect to allocation of resources of goods and services. Consumers makes consumption decisions and firms make production decisions. Microeconomics focuses on how individuals, households, and organizations make their decisions to distribute resources that are limited, typically in a market which sees trade of goods or services.
On the other hand, Macroeconomics studies the behavior of the economy and its entirety, on larger scale (Investopedia ULC. 2010). Macro-economics studies the entire economic activity, covering he issues of growth, inflation, and unemployment and with national economic policies relating to these issues and the effects of government actions.
Macroeconomics is dependent on the regional government which will differ from one country to another and in some cases even one state to another. This is due to different forms of government and policies in different parts of the world. Microeconomics on the other hand, depends on mainly the behavior of people in various parts of the world.
It is the standard approach of microeconomics, although not without controversy, to assume that consumers seek to maximize satisfaction and firms seek to maximize profits. The mechanism through which consumers and firms interact with each other is the market. Microeconomics analyzes the determination of market demand and supply, various forms of market structures, and how they affect economic efficiency.
From our discussion so far, it should be clear that microeconomics is very important for anyone who needs to make business decisions. This can be one practical...
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