Economics Fundamentals Quiz

Positive economics focuses on objective analysis and facts, while normative economics deals with subjective judgments and value judgments. An example of positive economics could be the study of the impact of minimum wage laws on employment levels, while an example of normative economics could be the argument for or against increasing the minimum wage.

The production possibility curve becomes a straight line when there is constant opportunity cost between the two goods being produced. This occurs when resources are perfectly adaptable for producing both goods at a constant rate.

Some features of microeconomics include the study of individual economic units, such as households and firms, the analysis of market mechanisms, the examination of consumer behavior, and the exploration of production costs and pricing decisions.

Microeconomics focuses on the behavior of individual economic units, such as households and firms, and their interactions in specific markets. On the other hand, macroeconomics deals with the overall performance and behavior of the entire economy, including factors like inflation, unemployment, and national income.

Some limitations of Microeconomics include the assumption of ceteris paribus (all else being equal), the inability to account for all external factors, the focus on individual decision-making rather than aggregate behavior, and the reliance on simplifying assumptions that may not always hold in the real world.