Discuss some of the fundamental differences between microeconomics and macroeconomics.
What will be an ideal response?
Microeconomics studies the decisions of individuals and firms, the ways in which these decisions interact, and their influence on the allocation of a nation’s resources and the distribution of income. Macroeconomics looks at how entire economies behave and studies the pressing social problems of economic growth, inflation, and unemployment. In short, whereas microeconomics focuses on the decisions of individual units, no matter how large, macroeconomics concentrates on the behavior of entire economies, no matter how small. Although they focus on different subjects, microeconomics and macroeconomics rely on virtually identical tools.
You might also like to view...
Which of the following is NOT a major driver of globalization over the past few decades?
In the aggregate demand/aggregate supply model, a country's full-employment real GDP is represented by:
a. prices. b. aggregate demand. c. aggregate supply. d. an increase in the general level of prices.
Suppose that the market for large, 64-ounce soft drinks in the town of Pudgyville is characterized by a typical, downward-sloping, linear demand curve and a typical, upward-sloping, linear supply curve. The market is initially in equilibrium with 1,000 soft drinks sold per day. The newly-elected Mayor of Pudgyville wants to tax 64-ounce soft drinks. She is considering either a $0.10 tax or a
$0.30 tax. Her chief economic advisor estimates that the number of soft drinks sold after a $0.10 tax will be 900 and after a $0.30 tax will be 500 . Which tax is better? a. The $0.10 tax is better because it raises more revenue and creates a lower deadweight loss than the $0.30 tax. b. The $0.30 tax is better because it raises more revenue and creates a lower deadweight loss than the $0.10 tax. c. It is not clear which tax is better because although the $0.30 tax raises more tax revenues, it creates a larger deadweight loss than the $0.10 tax. d. It is not clear which tax is better because although the $0.10 tax raises more tax revenues, it creates a larger deadweight loss than the $0.30 tax.
When does technology spillover occur?
a) when a firm passes the high costs of technical research on to society through higher prices b) when copyright laws prohibit firms from profiting from the research of others c) when a firm's research yields technical knowledge that is used by society as a whole d) when the government subsidizes firms engaged in high-tech research