“Economics is the science which studies
human behaviour as a relationship between ends and scarce means which have alternative
uses.
Or
It is a social science in which limited resources are allocated in such a manner that consumer gets maximum satisfaction, the producer gets maximum profit & society gets maximum welfare.
Difference between Micro and Macro Economics
|
Basis |
Micro Economics |
Macro Economics |
|
1.
Meaning |
It
is a part of economic theory, which studies the behaviour of individual
units. |
It
is a part of economic theory, which studies the behaviour of the aggregates
of the economy as a whole. |
|
2.
Aims |
The
aim of microeconomics is to determine factor and commodity price. |
The
aim of macroeconomics is to determine national income, output and employment
level of the economy. |
|
3.
Tools |
Tools
of microeconomics are demand and supply. |
Tools
of macroeconomics are aggregate demand
and
aggregate supply. |
|
4.
.Examples |
Demand,
Supply, Cost etc. |
National
Income, Inflation etc. |
µ The relationship
between Micro Economics and Macro Economics
A close interlink exists between macro and microeconomics.
It can be elaborated with the help of some examples:
Microeconomics depends on Macroeconomics
1. Law of demand came into
existence from the analysis of the behaviour of a group (aggregate) of people.
2. Price of a commodity is
influenced by the general price level prevailing in the economy.
Macroeconomics depends on Microeconomics
1. The national income of a country is the sum total of incomes
of individual units of the country.
2. Aggregate demand depends on the demand
of individual households of the economy.
Therefore, the study
of both is indispensable in economic study.
µ Positive Economics and Normative Economics
|
Basis |
Positive Economics |
Normative Economics |
|
Meaning |
Positive economics deals with an economic analysis that are based on facts and statistical data. (Objective) |
It
deals with how economic problems should be solved. (Subjective) |
|
Relations with problems |
Positive economics is related to ‘what actually is’. |
Normative economics deals with the issue of ‘what ought to be’. |
|
Value Judgements |
It
does not give any value judgements. Analyses cause and effect relationship. |
Normative economics is based on value judgement and debate, which are required to arrive at some conclusion. |
|
Examples |
As per 2011 census, India’s population was around 121 crore. |
India should control its |
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