Macro - and Microeconomic Differentiations (Coursework Sample)

Macro- and Microeconomics
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Macro- and Microeconomics
As we have come to know it, economics is mainly focuses on the study of allocation of limited resources in order to satisfy the unlimited wants. Economics if viewed in a closer perspective is divided in two primary areas/branches of study. These are Microeconomics and macroeconomics. The most usual classification of economic analysis is the distinction between micro and macro economics. Overall, the major distinction between micro- and macroeconomics is how the two branches view the economy from their separate vantage points; where, microeconomics studies the individual economic units of the economy like those of small scale businesses or households whereas macroeconomics looks at the economy from a broad sense affecting regional or global economy (Carlin, W.,et al 1996). The comparison analyses the constituents of macro- and microeconomics, their applications/examples and the impacts from decisions made regarding these economics.
Microeconomics is the study of decisions that people and businesses make regarding the allocation of resources and prices of goods and services. This means also taking into account taxes and regulations created by governments. Microeconomics focuses on supply and demands and other forces that determine the price levels seen in the economy. For example, "microeconomics would look at how a specific company could maximize its production and capacity so it could lower prices and better compete in its industry".    Macroeconomics, on the other hand, is the field of economics that studies the behaviour of the economy as a whole and not just on specific companies, but entire industries and economies (Jackson, D. 2012). This looks at economy-wide phenomena, such as gross national product (GDP) and how it is affected by changes in unemployment, national income, rate of growth, and price levels. For example, "macroeconomics would look at how an increase/decrease in net exports would affect a nation's capital account or how GDP would be affected by unemployment rate". While these two studies of economics appear to be different, they are actually interdependent and complement one another since there are many overlapping issues between the two fields.
Every day, microeconomics decisions are made by various individuals, customers and businesses. One such microeconomic decision that my organization had to undertake was brought about due to scarcity. Within the operations of our organization, there was a shortage of labour, but because however bountiful resources in terms of job seekers might seem, there remain limits too income and options. Therefore, an advert was posted that the vacancy needed to be occupied quickly. As we received more resumes and applications, the probability of acquiring a better candidate (marginal benefit) declined with every additional candidate that was interviewed. Concurrently, the marginal cost of leaving the position vacant grew. Understanding the microeconomic theory provided a solid decision where each choice we make has an opportunity cost that is the next best foregone alternative (Besanko, D.,et al et al 2011). Therefore, it was concluded that as long as the marginal benefit exceeded the marginal cost, it pays to keep the looking for the best candidate to be hired for the position. The businesses ended up acquiring several candidates including applicants from rival companies with very high expertise.
Macroeconomics is rooted inevitably in microeconomics. This is because economy-wide phenomenon covered under macroeconomics occurs from the relations/interactions of several individual businesses and household firms (Carlin, W.,et al 1996). Such ...