MicroEconomics and MacroEconomics
So Micro is when you are zooming in, to reach that smallest entity in the economy and analysing it's behavior. Thus a consumer or a producer is a perfect entity whose typical behavior we study in micro economics.
Then Macro is zooming out to see an overall picture of the economy. Thus the health of the economy in terms of gross or total production, employment, money flow, income, all are studied in macro economics.
Milk prices going up....micro or macro?
Micro because milk is just one of millions of products sold in the economy, and so many people perhaps do not even buy milk at all! (think about the lactose intolerants and vegans!)
How about gas prices going up.....micro or macro?
Yes, most people own cars and need gas for the cars, but still...gas is just one of the many products.
Most prices going up? Micro or macro?
Hmmmm.....most prices going up, is economy wide phenomenon....it's inflation! So macro.
So Micro is when you are zooming in, to reach that smallest entity in the economy and analysing it's behavior. Thus a consumer or a producer is a perfect entity whose typical behavior we study in micro economics.
Then Macro is zooming out to see an overall picture of the economy. Thus the health of the economy in terms of gross or total production, employment, money flow, income, all are studied in macro economics.
Micro because milk is just one of millions of products sold in the economy, and so many people perhaps do not even buy milk at all! (think about the lactose intolerants and vegans!)
How about gas prices going up.....micro or macro?
Yes, most people own cars and need gas for the cars, but still...gas is just one of the many products.
Most prices going up? Micro or macro?
Hmmmm.....most prices going up, is economy wide phenomenon....it's inflation! So macro.
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