Micro-Economics Concept Evolution
In 1933, Ragnar Frisch divided economics into two different sections as microeconomics, macroeconomics. The term microeconomics is derived from the Greek word ‘Mikros’; means very small or narrow. Microeconomics sees the whole economy at the micro-level. It discusses how people deal with money from an individual perspective. Microeconomics normally deals with the analysis of small individual units of the economy such as individual consumers, individual firms, and individual markets.
Microeconomics works as the branch of economic knowledge which concerns with individual production, consumption, distribution, and deal with particular aspects of an economy and the effects of individual decisions, individual behavior, individual demand, individual price line, individual expense and revenue, individual savings.
Many economists give in particular definition in a different aspect. According to K.E.Boulding, “Microeconomics is the study of a particular firm, a particular household, individual price, wages, incomes, individual industries, particular commodities.”
Professor Ragan and Thomas said,” Microeconomics is the study of the individual units that comprise the economy.”
Economists Handerson and Kuant also said, “Microeconomics which is the study of the economics actions of individual and well-defined groups of individuals.”
From that definition, We get some features such as-
- Microeconomics deals with individual economic variables.
- It applied to operational or internal issues.
- It concern about an individual aspect
- It helps to identify Individual economic conditions.
- It covers demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc.
Difference between Macro & Micro Economics
If we judge the perspective of the analysis method, we can see that there are conspicuous differences between Microeconomics and Macroeconomics, and both are surrounded by some limitations as they have some own features. That’s why Micro and macro-economic have remarkable disparities objectively and structurally.
The difference between is given below:
- The branch of economics that studies the behavior of an individual consumer firm, family, is known as microeconomics.
- The branch of economics that studies the behavior of the whole economy, both national and international, is known as macroeconomics.
2) Discussing topic:
- One consumer behavior, one consumer demand, price fixing of one product, individual revenue and expenses, savings, production possibility of an organization, etc. Are the topics of microeconomics.
- Total production, national revenue, total demand, total supply, total savings, total investment, national price line, etc. are the topic of macroeconomics.
- Microeconomics consists of individual entities.
- Macroeconomics stands on microeconomics.
4) Dealing System:
- Microeconomics deals separately with different parts of economic conditions
- Macroeconomics deal aggregately with national and international economic condition
5) Business Applications:
- Microeconomics can apply to operational and internal issues.
- Macroeconomics can apply to environmental and external issues.
6) Effectiveness in real life:
- Microeconomics discuss the economic system in a small range that’s why it is not effective in real life
- Macroeconomics is effective in real life. we can see here the whole economic system /condition.
7) Full recruitment status:
- Microeconomics discusses anything containing that full recruitment status are existing.
- Macroeconomics discusses all economic parts without containing this.
- Microeconomics concern with personal/individual economic growth.
- Macroeconomics concern with national/international economic growth.
Contributor: Umma Rajuly Erina
From Mawlana Bhashani Science & Technology University