Microeconomics And Macroeconomics Of Microeconomics

729 Words Sep 7th, 2016 3 Pages
Economics, or the study of human decision in the midst of scarcity, contains the related studies of microeconomics and macroeconomics. These two studies focus on economics from differing scales, with microeconomics primarily concerned with the way individuals and commercial entities handle scarcity and macroeconomics concerned with the overall effect on nations and large economies. While both are related there are key differences.
Microeconomics, or the study of how individuals agents in an economy make decisions in relation to scarcity, uses such concepts as marginal analysis, fixed, marginal and variable cost to measure how those decisions are made. Concentrating primarily on individuals and single commercial entities, microeconomics measures how these individuals analyze and make decisions in relation to the scarcity of budget constraints. A great example of this is the decision that must me made by consumers on which house to buy or rent, and which products to consume, or the decisions by companies on which products to produce and at what quantity.
Macroeconomics, on the other hand, follows the large picture, and is concerned with the production of an entire society. Such ideas as how monetary policy, or the quantities that banks lend and the interest rates, and fiscal policy, or the expenditures and taxation rates, affect what is produced and consumed by a society as a whole are common themes. While different from microeconomics, much of macroeconomics drives and is…
Open Document