Macroeconomics and microeconomics are two of the most important concepts of economic theory. Why is the whole economy divided in this way? To answer this question, we will try to deal with each of the terms separately, and then consider them in relation.
The peculiarity of economics as a science
Economics (macroeconomics, microeconomics) is not only practical, but also a scientific discipline. She is engaged in the study of issues related to the distribution of resources, financial flows, and the efficiency of economic and entrepreneurial activities. Its very name suggests that the main goal of the economy is to develop methods for the most efficient (not requiring extra costs) use of resources and rationalization of the economy.
The concepts of "macroeconomics" and "microeconomics" have been present in economic theory for a long time. Now, when planning any activity, a miscalculation of economic parameters, as well as possible environmental consequences, is mandatory. In all civilized countries, this practice is mandatory.
Features of microeconomics
Microeconomics is engaged in the analysis of the economic activities of individual economic entities: households, firms, enterprises. All decisions made within them are components of microeconomics. Thus, the named discipline studies economic processes at the local, local level.
The main microeconomic task posed by almost every private entrepreneur is to maximize profits. Therefore, everything possible is being done (within the framework of existing laws and the current situation) for the production of as many goods as possible and their appointment of the highest possible price.
The consumer is trying to get the goods he needs at the lowest price. In this case, unlike the manufacturer, the amount of purchased goods is limited by their individual needs, and the goal of getting as much as possible is often not worth it.
Microeconomics, unlike macroeconomics, studies local economic systems and objects and never deals with problems of the federal, and even more so global level. Therefore, the term "state" is absent in this discipline.
The main activities in microeconomics:
- Production.
- Exchange.
- Distribution.
Microeconomics is trying to explain how and why individual economic entities make certain decisions and what factors influence this. For example, it considers issues such as decision-making by company management on the number of employees, the actions of customers when they choose certain products, the impact on customers of changes in prices and personal income, and many others.
In the decision-making process by private entities, factors such as supply and demand are of great importance. In microeconomics, there is a theory of social choice, which is an independent section of economic theory.
What is demand?
Demand is the volume of goods or services that the buyer agrees to purchase at a certain set price on him. With a decrease in prices, demand grows, and with an increase, it falls. Thus, it is possible to build a demand curve depending on the price. It is also affected by the level of income, the characteristics of the buyer himself, the promotion of the brand, etc.
What is an offer?
This term refers to the amount of goods or services that the manufacturer is ready to offer based on their price and production capabilities, as well as the cost of production, taxes and other factors. The supply curve shows the dependence of the latter on the price of the goods. Usually, when it increases, the supply increases. If the costs of production turn out to be more than the proceeds from its sale, then it may become unprofitable for the manufacturer to sell his goods and, ultimately, the company may go bankrupt.
The presence of competition with other suppliers often leads to lower final cost of products.
What macroeconomics studies
As already mentioned, microeconomics and macroeconomics are two components of economic science. But macroeconomics is different in that it studies the entire economy as a whole and in a wider territorial scope. Its founder is John Keynes. Such coverage allows you to give answers to many pressing questions, considering:
- unemployment rate;
- the amount of general inflation;
- economic growth, stagnation or recession;
- GDP dynamics;
- total cash flows;
- world exchanges;
- the total value of imports and exports of the state;
- loan rates;
- general purchasing power of the population;
- investment attractiveness;
- foreign exchange reserves and the total debt of the state.
The most important components of the macroeconomy are the gross domestic product (GDP) and gross national product (GNP), as well as the magnitude of inflation, the exchange rate and the general level of unemployment.
The economy is usually divided into 3 markets: the market of goods and services, financial and the market of production equipment. In addition, 4 agents are distinguished in it - these are enterprises, households, the state and the foreign factor. All of them are interconnected by economic ties.
