3 replies to this topic

[Amir Palermo]

I had an Economics quiz last week and there was this one question which asked us to determine whether the statement referred to Micro or Macroeconomics.

To my understanding, anything to do with the behaviour of individual consumers, firms, and industries were considered as MICRO, and anything else were considered as MACRO. But after receiving my marks yesterday, I thought wrong.

1. Which of the following are microeconomic issues/topics and which were macroeconomic ones?

a) The level of consumer spending.
b) Subsidies paid to farmers
c) The level of UK exports
d) The price of DVDs
e) The rate of unemployment
f) The average wage rate paid to textile workers
g) The total amount spent by UK consumers on clothing and footwear
h) The amount saved last year by UK households

I answered

a) Micro
b) Macro
c) Macro
d) Micro
e) Macro
f) Macro
g) Micro
h) Micro

-but I got a, b, f, and h wrong.

Isn't it true that anything related to key words like "consumers", "firms", and "industries" are considered as Micro? Or have I been living a lie all this while? *gasp

Oh and another question:-

Is the statement "Consumers seek to get the best value for money from the goods they buy" considered as a rational economic decision? I said False but it turned out to be True.

Much help is appreciated! Thank you in advance! (:

[IBCONQUERER]

Well look at this way. Macroeconomics deals with AGGREGATE demand and supply. Aggregate demand includes everything from consumer spending to government spending to net exports to investment. So anything that has to do with any of these 4 components is part of macroeconomics. Consumer spending reflects several markets not just one. Had it just been consumer spending in a certain market then that is microeconomics. Subsidies paid to farmers are microeconomics because it deals with just one market (the agriculture market) so its microeconomics. Average wage rate paid to TEXTILE workers is also micro because it involves a single market not a range of markets. Households are essentially consumers and since its plural its talking about consumers overall. A good way to look at this is just think about the definition of inflation. There is something in it that talks about average price levels meaning it deals with more than just one good but a number of goods. Whereas a single increase in price falls in microeconomics, so just look at whether one market is involved or plural markets are.

Yes second one is true because think about consumer surplus. The aim of producer is to maximise profit and the aim of the consumer is to maximise utility. Utility is the satisfaction he gets from consuming a certain unit. So the best satisfaction will be when he can obtain a large sum of goods at the best possible price because that maximises consumer surplus. So yes consumers try to maximise what they buy at the lowest possible price it is rational.

[Tanja Mikic]

Suggest some good Micro & Macroeconomics books that i didn't have chance to read in school. Ebooks or just name whatever. Sorry for the bad english.

Edited by Tanja Mikic, Aug 14, 2012 - 14:44.

[The Economist]

Suggest some good Micro & Macroeconomics books that i didn't have chance to read in school...ebooks or just name wathever...sry for bad englihs.

Do you mean economic textbooks or books for casual reading?