Answer to Question #187998 in Microeconomics for Yvette

Question

Explain how microeconomics differs from macroeconomics. Which of the following headlines, taken from the various issues of The Daily Graphic, deal with microeconomics:

a. “Nestle Ghana posted a 18% increase in sales”

b. “GRIDCO plans to slash more jobs”

c. “Ghana’s Output Grew by 5.8%”

d. “Housing starts soared 10% in September”

e. “Ghana to Breach key Deficit Target it helped to create”

Explain each issue why it is a microeconomic issue

Answer 1

Microeconomics studies individual and business decisions such as individual income and price of goods while on the other hand macroeconomics analyzes the decisions made by countries and governments on issues like employment rate and national household income.

Issues that deals with microeconomics are;

(a) Nestle posted a 18% increase in sales.

(b)GRIDCO plans to slash more jobs.

Explanation to why they are microeconomics issue;

The 18% increase on sales means the Nestle will earn more profits hence increasing it's individual income.It therefore has a direct effect on the firm but not the government.

•GRIDCO planning to slash more jobs.This is an individual decision made by the firm itself aiming to lower or reduce it's running costs.