What are the main differences between microeconomics and macroeconomics?
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As an economist, you have been asked to address a meeting of a group of international professionals to explain the differences between microeconomics and macroeconomics and to provide real-world examples.
- The main differences between microeconomics and macroeconomics
- An example of each phenomenon
- A description of a microeconomic decision you made, and the factors that contributed to your decision
- A description of a specific macroeconomic phenomenon or event and how it has impacted you
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Solution Summary
This solution discusses micro and macro economics and how they impact decision making in 744 words.
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1. Differences between microeconomics and macroeconomics.
Economics is a social science that studies the production, distribution, and consumption of goods and services. Economists generally divide economics into two branches, Microeconomics and Macroeconomics.
Microeconomics is the study of individuals (by individual here, I could mean individual persons, families and firms) and how they maximize their welfare, while limited by constraints (constraints here could be financial constraints, resources constraints, time constraints etc.). Microeconomics focuses on supply and demand, and other factors that determine price level. For example, microeconomists may look at what a particular firm does to maximize production, while maintaining a low price to better compete in the industry.
Macroeconomics deals with the performance, structure, behavior and decision-making of the entire economy, be that a national, regional, or the global economy. In macro, we look at issues such as GDP and how it is affected by changes in unemployment, national income, rate of growth, and price levels.
2. Examples of each ...
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