Micro Economics and Macro Economics | Engineering Economics

The study of economics is broadly divided into two categories:

  1. Micro Economics
  2. Macro Economics

In our previous article “Introduction to Building Economics as related to Architecture“, we discussed certain important terms relating to Building Economics. This article is the continuation of the study of Micro Economics and Macro Economics. This article will give you a brief idea of Macro Economics and Micro Economics.

Micro Economics

It is a small part of whole economics which deals with individuals, their needs, their behaviour, individual firms and its activities. This deals with studies like incomes, capital spending on building, individuals who are engaged in various products for building construction.

Micro-economics is also called Price Theory.

Importance of Micro-economics

It analyses how millions of consumers and producers in an economy take decisions about products and services offered. It also deals with how buildings and services are distributed belonging to different economic status.


  • It cannot give an idea of the function of the economy as a whole.
  • It assumes full employment which is a rare phenomenon in developing countries or even developed countries which is quite unrealistic.

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Macro Economics | Economics Related to Building Industry

Study of Macro Economics

Study of Economics can be divided into two parts:

  1. Micro Economics
  2. Macro Economics

In this article, we are going to discuss various terms related to Micro Economics. Check out the brief on “Macro Economics and Micro Economics“.

Here is the list of terms we are about to discuss in this article:

  1. Demand and supply
  2. Inflation
  3. Interest rate
  4. Employment
  5. Savings and Investments
  6. Monetary Policy
  7. Fiscal Policy

Demand and Supply

At national level, this depends on the government policies. How different building activities and infrastructure are planned and budgeted. Taxation polices, direct and indirect tax, allocation of funds for housing for the weaker sections in Five Year plans.


This aspect depends on how effectively the government can control inflation by exercising control over general price rise and building materials, effective tax collection both at central and state level, maintaining equilibrium in demand and supply, earning foreign exchange. The increase in oil prices invariably increase the cost of living in all walks of life including building industry.

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