A common question among many students when studying macroeconomics is, “When studying microeconomics, does it make any difference if you study micro versus macro models?” The answer is that it doesn't make much of a difference. The fact is that the macro models that we use to analyze the micro are based on concepts that are essentially the same for both micro and macroeconomic models.
First off, it is important to understand what micro economics is all about. The reason this question pops up with many students is because they want to know if macroeconomic models are used to study the microeconomic theory. In reality, the answer is a resounding yes.
Micro-economic theory, or micro economics as it is commonly referred to, is the branch of economics that is most concerned with analyzing the minutia of everyday economics. Microeconomics is the field of economics that focuses on individual decision-making. It focuses on individual decisions as they relate to economic variables such as price, demand, supply, and preference. This type of microeconomics deals directly with consumers and how their decisions affect the economic variables that affect them.
Now, let's take a look at a macro model. When macroeconomics is compared to microeconomics, it becomes clear that there are no real distinctions. If a macro model is used, it's because it is built on concepts that are common to microeconomics. A common concept that is commonly used to determine prices is demand.
Demand is a fundamental concept in economics. Demand is a measurement of how much something costs. If there are too many people seeking to buy a particular good, then there is a high demand for it. If not enough people are willing to buy it, then the supply is low and the price is lower. A good example of this concept can be seen in the price of gasoline.
Demand, however, is only one of the many concepts that are related to demand. There are others including price elasticity and cost. The concepts of price, demand, and cost, however, are the ones that are usually associated with microeconomics and the concepts that they focus on.