Explain the difference between Microeconomics and Macroeconomics
What will be an ideal response?
Microeconomics and macroeconomics differ in the economic unit on which they focus. Microeconomics focuses on the individual economic agent, i.e., the consumer or the firm. Whereas macroeconomics considers the economy as a whole. There is a close link between the two branches, however, because many macroeconomic relationships are based on aggregate versions of the behavioral relationships derived on the microeconomic level.
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When firms set prices by adding a fixed percentage markup to marginal costs, they are likely
A) concerned with the rate of profit rather than its net amount. B) earning a satisfactory rather than a maximum profit. C) exploiting their customers. D) poorly managed. E) searching for the most advantageous prices to set on the basis of limited information.
Economists call a game that is played more than once:
A. a repeated game. B. collusion. C. a commitment strategy. D. cooperative price play.
If a monopolistically competitive industry is in long-run equilibrium and suddenly the cost of resources increases, then:
a. the demand and average-revenue curves will shift to the right. b. the demand and average-revenue curves will shift to the left. c. some firms will eventually leave the industry. d. new firms will eventually enter the industry. e. the cost structure of the firm will shift down.
Is peak pricing economically efficient? Explain. Give an example to illustrate your answer