Hello everyone, welcome to the Singhvi Online family. Hope you are in the best of health and spirit. In today’s blog, we are going to understand the concept of Micro-economics and Macro-economics And the nature of Business economics.
Table Of Contents:
- Meaning of Micro Economics
- Definition of Micro Economics
- Interpretation
- Meaning Of Macro Economics
- Definition Of Macro Economics
- Interpretation
- Difference between Micro and Macro Economics
- Nature & Scope Of Business Economics
Just excuse me for taking your valuable time. I need to share this. When this topic of micro and macroeconomics came up in my college, I started to bunk economics lectures. Then one day I just sat peacefully and read the content and believe you me I was thinking this is just the simplest thing on earth. Then I decided one day I will write a blog on it. And there you are, so some personal emotions have attached to this blog. Anyway, the simplest technique to distinguish between micro and macro is: micro is small and macro is big. So having kept this in mind, let us first understand the meaning of microeconomics:
Meaning of Micro Economics: The term Micro Economics derived from the Greek word “MIKROS” which means ‘small’. The term first coined by economist Rangar Frish in 1933. Thus, it is the MicroScopic study of an economy.
Definition Of Micro Economics: Microeconomics is the study of individuals, households, and firms’ behavior in decision-making and allocation of resources. It generally applies to markets of goods and services and deals with individual and economic issues.
Interpretation : what we understand from the meaning and definition of microeconomics is that Microeconomics studies individual units, for a particular level at a microscopic level.
Meaning of Macro economics: The term Macroeconomics had derived from the Greek word ‘MAKROS’ meaning ‘large’. The term first coined by economist Rangar Frish in 1933. Thus, it is a big picture of economics that is concerned with how the overall economy works.
Definition Of Macro Economics: Macroeconomics is a branch of economics which studies economic problems (or economic issues) at the aggregate level of economy, i.e, considering the whole economy. It deals with subjects like national income, national output, employment, etc.
Interpretation: what we understand from the meaning and definition of macroeconomics is that Macroeconomics studies about a group of units, the economy as a whole,considering the entire economy.
Having understood the meaning and definition of economics, in order to have a hold at the topic let us distinguish between Micro and Macro economics to have a holistic understanding.
Difference between Micro and macro Analysis:
| Micro Economics | Macro Economics |
|---|---|
| It is the study of behavior of different individuals and organizations within an economic system. | Is the study of overall economic phenomenon or the economy as a whole, rather than its individual parts |
| Microeconomics examines how the individual units (consumers or firms) make decisions as to how to efficiently allocate their scarce resources. | In macroeconomics, we study the behavior of large economic aggregates, such as, overall levels of output and employment, total consumption, total saving and investment, exports, imports and foreign investment and also how these aggregates shift over time. |
| Focus is on a few or a group of units rather than all the units combined. | It analyzes the overall economic environment in which the firms, governments, and households operate and make decisions. |
| It does not explain what is happening in the wider economic environment. | Economic environment represents the overall effect of the innumerable decisions made by millions of different consumers and producers. |
| We mainly study the following: | A few areas that come under: |
| Product pricingConsumer behaviorFactor pricingThe economic conditions of a section of peopleBehavior of firms andLocation of industry | National income and national outputGeneral price levels and interest ratesBalance of trade and balance of paymentsExternal value of currency Overall level of savings and investments andThe level of employment and rate of economic growth. |
Conclusion:
- Business economics is mainly related with microeconomics, macro-Economics also has an important role to play.
- Macroeconomic analyzes the background of economic conditions in an economy which will immensely influence the individual firm’s performance as well as its decisions.
- Business firms need a thorough understanding of the macroeconomic environment in which they have to function.
- For example, knowledge regarding conditions of inflation and interest rates will be useful for the business economist in framing suitable policies.
- Moreover, the long-run trends in the business world will be determined by the prevailing macroeconomic factors.
Continue………..stay tuned and Go to next blog : nature-scope-of-business-economics
Thanks for Reading, Always Welcome.
