What are the main differences between microeconomics and macroeconomics?
There are dissimilarities between macroeconomics and microeconomics, even though, it is difficult to separate the functioning of the two at times. Macroeconomics and microeconomics are the main categories in the economics fields. Microeconomics as a branch deals with markets, industries, prices, supply and demand (John, 2000). Thus, it deals with difficulties present in the market related to goods and services and how the market is affected by prices fluctuation.† Microeconomics scrutinizes the behavior of particular economics units, that is, firms and consumers. Consequently, it determines how farms price there goods and make profit and means that individuals use to make consumption pronouncements. The main agenda of microeconomics is wage markets, markets, rent markets, the market for gasoline, among others. On the other hand, macroeconomics studies the economy at large (Joseph, 2006). However, it mainly majors on unemployment, business cycles, aggregate production, and inflation. Microeconomics is thus a vast arena that essences on two areas national income changes and economic growth. Some of the questions that come up in this include what triggers inflation, and how the nationalís economy is affected by depts. (Campbell, 1990). It also reflects on the five major economic goals, which are equity, efficiency, economic growth, stability, and full employment. All this depend on economic policies fundamentally. This five are thus broken down to three that are most essential for macroeconomics, which are stability, full employment, and economic growth and two for microeconomics: equity and efficiency (Daniel, 2009).
An example of a microeconomic decision I have made at home.
Since we have many cows at home, we produce a lot of milk. This had gone down due to climatic changes and we had to increase our prices to the buyers to be able to pay the workers and remain in the market. I knew this decision would be effective as the demand for the commodity was high. Consumers remained loyal until when the state of production went back to normal and we had to reduce prices again.
What factors contributed to making the decision above†††
Cost and price are two different things in some instances. Opportunity cost measures cost directly: how much one can give up buying the goods. In this case, prices had to reflect a bigger part of the opportunity cost.We therefore had to consider that during bad weather we do a lot of additional work, which consumes more time. The government in that period had also improved the consumerís income and we had to increase our prices as a way of reacting to the market changes. The price of the subsidies products was high hence; the increase of milk price was well accepted.
Would you give an example of a microeconomic decision you have made at home?
In our milk production project at home, we had to cut down the number of workers ones since many cows had died. This was very necessary because we could not contain all the workers when there was barely enough work for all of them. The priorities of the project had to come first and to save our profits some workers had to go.
What was the result of the decision above?††††††
The status of our project was maintained; as some workers were no longer working with us hence their salaries filled the losses we were to incur now. There was an immense reduction in production consequently milk supply. This was as an outcome of the deaths of the cows.††