Explain the basic distinction between microeconomic analysis and macro

Explain the basic distinction between microeconomic analysis and macroeconomic analysis. Describe the types of issues that each branch of analysis focuses on.

What will be an ideal response?

ANSWER

Microeconomic analysis focuses on the behavior of individuals, e.g., consumers and firms. It is concerned with such issues as how a firm can produce output most cheaply, how much revenue it can expect to receive from the sale of a good, and how much of a good consumers will purchase at each price. Macroeconomic analysis focuses on the overall level of economic activity. It is concerned with such issues as what factors will cause the rates of inflation and unemployment to change and what types of policies can be used to influence the overall level of economic activity.