ELEMENT Microeconomics
Microeconomics is the study of economic actions of individuals Macroeconomics studies the economy as a whole and not a single
and small groups of individuals. Microeconomics focuses on
Definition
supply and demand, and other forces that determine price
levels, making it a bottom-up approach.
Study the problems on an individual level
Individual economic units
Demand and supply
The Relationship Between
Bottom-up approach
Microeconomics and
- Consumer decision making and utility maximization.
Macroeconomics - Firm production and profit maximization
- Individual market equilibrium
- Effects of government regulation on individual markets
On demand side is to maximize utility whereas on the supply
side is to minimize profits at minimum cost. The objective is to
Objective analyze and predict the behavior of
these groups, be it the supply of goods and services
in the market, income, factors that determine
It helps in determining the prices of a given product
and also the prices of various factors of production.
Advantages
It is based on a free enterprise economy, which means
that the company is independent in making decisions.
The assumption of full employment is unrealistic.
Disadvantages It analyzes only a small part of an economy, while a
larger part is not studied.
Household consumption. Salary of a worker.
Example
Consumer preferences. Consumer tastes.
Consumer decision making and utility maximization, firm
production and profit maximization, individual market
Important subjects
equilibrium and effects of government regulation on
individual markets.
One difference is thatconcerns things that
Differences economists are specifically wrong about, is about the
money you don?t have
Micro refers to the observation of small economic
units, such as the effects of government
Chatacteristics
regulations on individual markets and consumer
decision making.
Microeconomics appears as a part of economics
from the marginalist and neoclassical school, in the
Origins
19th century, with the purpose of analyzing small
economic agents.
Beggs, Jodi. (2023, April 5). Microeconomics Vs. Macroeconomics. Retrieved fromhttps://www.thoughtco.com/microeconomics-versus-macroeconomics-1147004
Difference between microeconomics and macroeconomics. (2018, July 24). Differentiator. Retrieved September 1,
2023.https://www.diferenciador.com/microeconomia-y-macroeconomia/.
Difference between microeconomics and macroeconomics. (2018, July 24). Differentiator. Retrieved September 1,
2023.https://www.diferenciador.com/microeconomia-y-macroeconomia/.
Macroeconomics
unit but combination of all. macro- refers to the "big picture" version
of economics like how interest rates are determines and why some
countries' economies grow faster than others'.
General economic issues
Aggregate economic variables
Aggregate demand and supply
Top down approach
- Effects of general taxes such as income and sales taxes on output
and prices
- Causes of economic upswings and downturns
- Effects of monetary and fiscal policy on economic health
Full employment, price stability, economic growth and favourable
balance of payments. The objective is economic growth,
employment,
price stability, external equilibrium, equality in
income distribution and environmental equilibrium.
It is useful for determining the balance of payments,
along with the causes of deficits and surpluses.
It makes decisions regarding economic and fiscal
policies, and resolves public finance issues.
Only covers aggregate variables.
Inflation. Unemployment. Balance of payments.
Private debt.
Effects of general taxes such as income and sales taxes
on output and prices, causes of economic upswings and
downturns, effects of monetary and fiscal policy on
economic health and effects of and process for
determining interest rates.
Concerns things economists are wrong about
generally, is about money the government is out
of.
Modern macroeconomics is responsible for studying a
series of problems of great relevance to the
economies of countries. Among the most important
topics are: inflation, economic cycles, unemployment,
among others.
Modern macroeconomics did not emerge until the
1930s, the time of the Great Depression, when
there was a strong stagnation of productive
activities and a very high level of unemployment.