Microeconomics concerns itself with the allocation of resources as well as the distribution of goods. The allocation of resources and the distribution of goods ties in with pricing as well, and this is all part of a free market economy. Therefore, microeconomists concern themselves with studying the market economy: goods, services, prices, and distribution issues in specific economies. Microeconomics deals with sub-levels of the overall general economy.
Accordingly, the effect of a cigarette tax on the quantity of cigarettes sold would be studied by microeconomists rather than macroeconomists because this tax would affect price, consumption patterns by consumers, distribution based on demand for the product, as well as where it was most in demand.
A consumer's optimal choice of a flat-screen TV would also be studied by microeconomists rather than macroeconomists because, again, this involves the market economy. It involves the allocation and distribution of various types of flat-screen TV’s at different price points, and promoted in different regions, each region with its own economic idiosyncrasies.
The government’s optimal spending level would be studied by macroeconomists rather than microeconomists because this spending level is not a market economy issue that has to take in to account consumer wants and needs, supply and demand, pricing, product distribution, and such. The government’s spending level is something that affects a nation’s economy as a whole.
Macroeconomics concerns itself with the study of how the total economy works. It does not concern itself with what happens in the market economy of people and businesses and the choices they make. Macroeconomics looks at the big picture. Microeconomics narrows its focus and looks at the market economy and how issues affect consumer and business behavior.
Macroeconomics studies monetary and fiscal policy. Policies, programs, and laws instituted because of monetary or fiscal policy affect total demand in a nation’s economy. These are broad-based policies that affect the total economy.