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Question 1
(a) Explain scarcity, choices and opportunity costs.
(b) Elaborate on the main differences between microeconomics and macroeconomics.
(c) Explain the economic way of thinking.
Question 2
(a) What are the price, quantity and revenue received at equilibrium?
(i) Study shows that rice is bad for those wanting to lose weight. The quantity demanded is decreased by 7 tonnes. What are the new quantity demanded, price and quantity?
(b) Calculate the new revenue. Did the revenue increase or decrease?
Question 2
a) Equilibrium is attained when the demand and supply become equal. From the given demand and supply schedule, it is apparent that at price of RM 9, the quantity demanded and quantity supplied are the same which highlights existence of equilibrium.
Hence, equilibrium price = RM 9
Quantity received at equilibrium = 20 tonnes
Revenue at equilibrium = 20*9 = RM 180 Read More.
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Microeconomics is a branch of economics which studies the behavior of individuals & firms and analyzes market mechanisms. Microeconomics focuses on how entities utilize available resources to establish relative prices of goods and services.
The subject also deals with the impact of significant economic policies on the market and various other micro-economical scenarios. The underlying assumptions about the micro-level behavior form the basis of the modern macroeconomic theories.
Based on the equilibrium of microeconomics during different situations, economists have come up with three primary categories of the subject.
Micro Static= Micro Static Economics is the analysis of the relationship between supply and demand at a particular point of time. Comparative micro static= This branch analyzes two different equilibrium conditions comparatively but does not look into the reasons behind the disequilibria. Micro dynamics= Micro dynamics looks into different equilibrium states and analyzes the reasons & the process leading to equilibrium changes.
Microeconomics plays a vital role in the study of modern economic theory. The subject is crucial due to several reasons:
Price Determination
Business Decision Making
Business and Production planning
Understanding the economy
Helpful in the efficient employment of resources
Helps in International Trade
Basis of welfare economics
Understanding the consequences of taxation
Tool for evaluating economic policies
