Chapter 1 - Intro to Microeconomics vs. Macroeconomics Quiz

Assumptions

• Simplify the problem at hand in an analysis

• add realism to the analysis

• justify analysis

• are necessary for theories to become true

Differentiate between microeconomics and macroeconomics.

• Microeconomics focuses on individual economic agents such as households and firms, while macroeconomics studies the economy as a whole.

• Microeconomics deals with small businesses, while macroeconomics deals with large corporations.

• Microeconomics is concerned with international trade, while macroeconomics is concerned with local markets.

• Microeconomics focuses on plants and animals, while macroeconomics studies the weather patterns.

How does macroeconomics analyze the overall performance of an economy?

• By studying factors such as GDP, unemployment rate, inflation, and national income.

• By focusing on the impact of supply and demand on specific industries

• By studying individual consumer behavior

• By analyzing the stock market performance

Scarcity is defined as a limited supply of resources and...

• limited wants for those resources

• unlimited resources

• limited resources

• unlimited wants for available resources

Economic models are useful because they _________________.

• show the way people react to changes in the economy

• provide every detail about a problem to be studied

• judge the value of economic events

• make testing hypotheses unnecessary

In a trade-off, opportunity cost is the value of the ________________.

• factors of production

• action that was chosen

• scarce resources

• next best alternative

The study of how individuals and societies make choices about ways to use scarce resources to fulfill their needs and wants.

• macroeconomics

• microeconomics

• economics

• technology

Economists use models to simplify complicated real-world situations and demonstrate relationships between values.

• True

• False

ceteris paribus means

• the assumptions are weak

• the assumptions are strong

• other things being equal

• two assumptions are paired

Weak assumptions lead to stronger models because they are

• very abstract

• more realistic

• far fetched

• relaxed