What is the difference between Microeconomics and Macroeconomics?

The subject matter of economics is presently divided into two major branches: Micro Economics and Macro Economics. These two terms have now become of general use in economics.


  • Micro economics studies the economic behaviour of individual economic units.
  • The study of economic behaviour of the households, firms and industries form the subject-matter of micro economics.
  • It examines whether resources are efficiently allocated and spells out the conditions for the optimal allocation of resources so as to maximize the output and social welfare.
  • For example, micro economics is concerned with how the individual consumer distributes his income among various products and services so as to maximize utility.
  • Thus, micro-economics is concerned with the theories of product pricing, factor pricing and economic welfare.


  • Macro economics deals with the functioning of the economy as a whole.
  • For example, macro economics seeks to explain how the economy’s total output of goods and services and total employment of resources are determined and what explains the fluctuation in the level of output and employment.
  • It deals with the broad economic issues, such as full employment or unemployment, capacity or under capacity production, a low or high rate of growth, inflation or deflation.
  • It is the theory of national income, employment, aggregate consumption, savings and investment, general price level and economic growth.

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