MICROECONOMICS AND MACROECONOMICS

The subject matter of economics has been studied under two broad branches:

Microeconomics

When economic problems are studied, consider small economic units like individual customers or producers.
At the level of an individual economic unit the basic economic problem is the problem of choice related to allocation of scarce resources to alternative uses.
In microeconomics, the behavior of individual economic agents in the markets for different goods and services and try to figure out how prices and quantities of goods and services are determined through the interaction of individuals in these markets.
Microeconomics tries to understand human’s choices and allocation of resources.
It does not decide what are the changes taking place in the market, instead, it explains why there are changes happening in the market.
The key role of microeconomics is to examine how a company could maximize its production and capacity, so that it could lower the prices and compete in its industry.
A lot of microeconomics information can be obtained from the financial statements.
The vital components of Microeconomics are:

Macroeconomics refers to the study of economic problems at the level of the economy as a whole.
Unlike microeconomics, the focus shifts from maximization of individual’s gains to maximization of social welfare.
The central issues in macroeconomics relate to the overall level of employment, growth rate of national output, the general price level and stability of the economy.
Macroeconomics begins with the study of macroeconomic variables such as Aggregate demand (AD) and Aggregate Supply (AS).
It analyzes how the equilibrium level of output is struck.
In macroeconomics studies to get an understanding of the economy as a whole by focusing our attention on aggregate measures such as total output, employment and aggregate price level.
The vital components of macroeconomics are: