In the last decade or so, there has been an explosion in interest in micro and macro economics. This is due to the fact that most economists have either moved into other careers or are looking for something completely different from what they are doing now. There is a growing need for a fresh new approach and this article is written with a view to offering some guidance to those who want to find out more about these types of economics.
Microeconomics is basically all about the way in which economics deals with the minutiae of the economy. It deals with the small decisions that we make day to day such as the things we buy, the things that we use, the way that we work and the places that we live. Microeconomics is about thinking about how economies function and it does not give you an analysis of the larger issues.
Macroeconomics on the other hand is all about the macro issues of how economies work. The idea behind this type of economics is that there are too many small decisions in an economy and when the economy is broken down into smaller parts it can be easier to understand what is going on. For example, when dealing with economies of scale and economies of distribution, you may find that a small piece of technology can be very beneficial to a company but at the same time could have a negative effect on other companies if not taken care of properly. Therefore, you should not just look at the short term effects but rather the long term ones.
Microeconomics will deal with the things that we do on a daily basis while macroeconomics will look at the things that we do in the long run. For example, a company that produces cars may find that when the demand for cars starts to increase, the cost of manufacturing cars will increase. Microeconomics will tell the company that it will take longer to manufacture the cars than it thinks and in doing so the company will have to cut back on the number of cars produced. When this happens, the company has to make up the lost revenue somewhere else.
Microeconomics also deals with the distribution of income. Many times this is where a company will see its profits drop off and this is because it did not have enough of an income to make up for the difference between the amount of money it made off of one product and another. Microeconomics will tell the company that it needs to make sure that it takes into consideration all of its different costs in order to produce the highest amount of profit. These include things like the labour that it uses and the costs of producing the products.
Microeconomics is not really a science and can sometimes get rather complicated. The best way to get around it is to just ignore the micro side of the argument and assume that there are a lot of questions which can be answered by looking at the macro picture. That way you can focus on the big picture and not get bogged down with all the micro.