Answer to Question #188236 in Microeconomics for zoe sackitey

Question

5A.            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”

1. “GRIDCO plans to slash more jobs”
2. “Ghana’s Output Grew by 5.8%”
3. “Housing starts soared 10% in September”
4. “Ghana to Breach key Deficit Target it helped to create”

 

Explain each issue why it is a microeconomic issue

Answer 1

‘Economics’ is defined as the study of the use of scarce resources to satisfy unlimited human wants. It is the science of choice. So, it is the science that explains the choice that an individual makes. It also deals with alternative use & resource allocation in a more efficient way.

The main & important reasons to study 'economics' are:

- To study about scarce resource allocation

- To learn to way of thinking

- It provides knowledge about rational decision making.

'Economics' does not explain the procedure to make lots of money & this reason is also not mentioned in the book. It rather explains how money can be utilized rationally.

The study of economics is mainly divided into two streams. One is 'microeconomics' and the other is 'macroeconomics'. These two are the major part of studying economics.

'Microeconomics' is a study of economics that deals with the study of the behavior of individuals, households, and firms in making decisions and resource allocating effectively in the short term.

'Macroeconomics' is the study of economics that studies the behavior and functioning of the economy in the long run.

Option ‘a’ is related to ‘microeconomics’ as it speaks about an individual firm N of country G.

Option ‘1’ is also related to ‘microeconomics’ as it describes the decision of a monopoly firm in country G.

Option ‘2’ is not related to ‘microeconomics’, as it describes the economical situation of a country as a whole.

Option ‘3’ is also related to ‘microeconomics’ as it describes the economical situation of a domestic industry in country G.

Option ‘4’ is not related to ‘microeconomics’, as it describes the economical decision of a country as a whole.