The economy is a critical factor in how you live. You must be aware of how you, the government and businesses set up around you allocate their varying resources to meet their needs. While microeconomics focuses primarily on individuals and small businesses, macroeconomics looks at the government and the country's economy.

These two fields have very broad scopes, but they offer exciting careers and help you understand the way businesses, governments and individuals operate for survival and thrive. They enable us to understand the implications of various government monetary and fiscal policies and how these two coexist in order to better the economy.

What is Micro and Macro Economics?

Microeconomics is the study of human and business decisions in line with resource allocation and their impact on the prices of goods and services. It applies the bottom-up approach to analysing the economy. It looks at scarcity, choice and opportunity cost.

On the other hand, Macroeconomics looks at how government policies affect the economy. It is a more broad focus on economic development; it would be challenging to realise social equity without macroeconomics.

Microeconomics

The main concept of microeconomics is that demand and supply are elastic. It has 4 major theories:

• Theory of opportunity cost:

This is the cost of preceding a good or service to obtain an alternative within the market. It is dependent on the next best option and not the number of options available to choose from.

• Production theory:

This theory explains the relationship between the pricing of commodities and the supply while coupled with productive factors.

• Theory of consumer demand:

Consumer theory explains that we can determine what individuals like through their consumer behavioural choices, consequently determining the demand for a given commodity or service.

There are 3 types of Microeconomics

Simple micro statistics: It studies the equilibrium point for microeconomic variables within a given economy. It focuses on the demand and supply of a single good within the system.
Comparative micro statistics: Unlike simple micro statistics, this type of microeconomics considers more than one equilibrium point and variable. It, however, does not explain the movements.
Microdynamics: It seeks to explain the changes in different equilibrium points as these changes usually cause a shift in the price, demand and supply of goods.

Macroeconomics

This field of economics focuses on economic trends such as inflation, GDP, National income and unemployment. 

There are 3 types of microeconomic factors listed below:

• Positive: This involves situations that promote economic stability. A great example is increased investments that, in turn, lead to a decrease in the pricing of commodities and services.

• Negative: This relates to factors that hinder economic stability, such as war and natural disasters. It usually leads to unequal distribution of resources.

• Neutral: The outcome usually largely depends based on the action. A great example will be trade policies across countries.

Difference Between Micro and Macro Economics

Scope of Micro and Macro Economics

The scope of microeconomics can be placed into 3 parts:

Theory of Product Pricing: This theory helps explain how the prices of goods and services are determined by analysing consumer behaviour and the supply of commodities. Prices are determined by forces of supply and demand within the market.

Theory of Factor Pricing : All variables that contribute to production, such as labour and capital, get a return in the form of wages and profits, amongst many others. This theory helps to explain how these rewards and gains are determined.

Theory of Economic welfare : This involves the efficient allocation of resources. This means that the scope of microeconomics is limited to the price theory. Resources are determined to be allocated efficiently when the production efficiency is at par with the efficiency in consumption, meaning that goods produced can satisfy the demand within a community.

Scope of Macroeconomics : This involves the economic well-being of a nation. Six theories hold the scope of macroeconomics. They are as listed below:

Theory of National Income : It involves different variables that are involved in determining and measuring national income. It helps in analyzing economic performance and explaining a country's employment trend.

Theory of Money : The change in the value of a currency directly impacts a country's economy. This theory emphasizes the importance of placing feasible monetary and fiscal policies and their effect on an economy. This theory explains the impact of reserve banks within an economy.

Theory of Employment : This scope of macroeconomics helps explain the factors that lead to unemployment as it affects supply and demand. Individuals have greater demand power when employed than when they are not, which in turn either strengthens or weakens the whole economy.

Theory of Economic Growth and Development : Macroeconomics focuses heavily on a nation's economy. Factors such as national income and GDP directly impact the economic growth of a country and the world in general.

Theory of International Trade : Focuses on international trade policies and how they may affect economic stability.

Theory of General Price Level : This involves the study of the prices of goods and services and how they are affected by either inflation or deflation in an economy.

Similarities Between Micro and Macro Economics

1. Both Macro and microeconomics fall under economics. They are meant to help people, businesses, and nations tackle economic challenges.
   
2. The national budgets affect both fields. For example, the government's money allocated to the agricultural ministry will impact food prices.
3. Both deal with business owners, whether small or large. Businesses are affected by variables present in both fields.
4. They are both affected by taxation. While taxes determine the prices of commodities, variables such as the national income are also affected by taxes.
5. Certain variables exist in both disciplines. This is especially true for factors such as land and prices of land hiking will affect the real estate businesses, which is a microeconomic impact. However, the taxes this industry brings affect the economy at large hence they have a macroeconomic impact.

Best Books for Micro and Macro Economics

This book will help you understand how businesses are inherently dynamic and the different variables that affect their operation.

Listed below are some of the best books that will help teach you the fundamentals of this discipline.

1. Principles of Microeconomics – N. Gregory Mankiw
   
2. Microeconomics – Paul Krugman and Robin Wells
3. Macroeconomics- Stephen Williamson
4. Prices and Quantities: Fundamentals of Microeconomics- Rakesh V. Vohra
5. Advanced Macroeconomics – David Romer
6. Monetary Policy Inflation and The Business Cycle – Jordi Gali
7. Freakonomics: A Rogue Economist Explains the Hidden Side of Everything- Steven Levitt and Stephen J. Dubner
8. Macroeconomics – Roger A. Arnold
9. Principles of Microeconomics- Franklin G. Mixon Jnr
10. A course in Microeconomic Theory - David M. Kreps

TOP University to Study Micro and Macro Economics in Abroad

Global advancements have made it easy to access education anywhere in the world. In this blog, we will break away from the norm and site more universities globally other than the usual top rankings in the United States of America and the United Kingdom and provide a more extensive scope of incredible institutions all around the world that you would love and are great and celebrated in their economic faculties depending on your preference.

• Massachusetts Institute of Technology, USA
  
• Harvard University, USA
• University of Oxford, United Kingdom
• University of Toronto, Canada
• Erasmus School of Economics, The Netherlands
• Bocconi University, Italy
• University of Melbourne, Australia
• London School of Economics and Political Science, United Kingdom
• ETH Zurich, Switzerland
• Hong Kong University of Science and Technology, China

We hope that this blog has provided you with in-depth and easy-to-digest information about the micro and macroeconomic disciplines. It is critical that with global advancement, we strive to understand our economic systems and how they operate to make more informed choices.

We hope that the information provided has answered any questions you might have and pointed you in the right direction if you wish to pursue this course. Feel free to consult our experts if there are any lingering questions. We are here to educate, enlighten and match you to an ideal course and university in line with your preferences.

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