Microeconomics and Macroeconomics

Economics is basically the study about the optimum utilization of the scarcely available resources. To study about the science of utilization of resources we must have the knowledge of basic principles associated with it. we need to have some insights about the price level of commodities, demand and supply of products, production of the goods etc. 

The subject knowledge of economics is divided into two parts. the part which deals with the single households or a small group of people is called microeconomics,as the name indicates micro means very small. This is why in microeconomics we deal with the economics principle on a small scale like earning of a household, expenditure of a house hold, manufacturing capacity of a particular company etc.

The other part which deals with the economic variable associated with the whole of the economy is called Macro-economy  in Macro- economy we deal about the GDP of the country, inflation in the economy, production capacity of the whole manufacturing sector in the economy. Again the term macro associated with macroeconomics clearly defines that it deals with the economic principles at a very wider level.

One question that might arise in your mind is that why not the study about the macroeconomics as a whole will suffice without having microeconomic approach and vice-versa? Well it might be in some cases, the macroeconomic principles may be applied to the microeconomic decisions but in most of the cases,both do not resonate. For example consider a farmer growing paddy in his field. Growing more and more paddy will be beneficial for him, but if all the farmers started growing a good yield of paddy, imagine what will happen to the paddy price in the economy? the price of the paddy will reduce drastically and the remuneration earned by the farmers will be very less. The government will have to intervene to keep the price level fixed. This is the case exactly happening in India today. 

So we see that the policy of more and more production for a single farmer is beneficial but the opposite is the case when we will consider the economy as a whole. So it is imperative that a separate study of the economics at two different level is needed. The study of microeconomics and macroeconomics fulfill this very idea.