Microeconomics Basics Quiz

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Questions and Answers

What does microeconomics analyze?

  • Currency inflation and economic growth
  • Individual agents and markets (correct)
  • Overall economy as a system
  • Factors affecting employment

What is the focus of macroeconomics?

  • Behaviour and interactions of economic agents
  • Public policies and their impact on economic elements
  • Economy as a system with production, consumption, saving, and investment (correct)
  • Factors affecting employment of resources

What is the distinction between positive economics and normative economics?

  • Economic theory vs applied economics
  • Describing 'what is' vs advocating 'what ought to be' (correct)
  • Analysis of individual agents vs overall economy
  • Rational economics vs behavioural economics

Which agents may be included in microeconomic analysis?

<p>Households, firms, buyers, and sellers (B)</p> Signup and view all the answers

What does rational economics focus on?

<p>Predicting economic behavior based on rational decision-making (C)</p> Signup and view all the answers

Flashcards

Microeconomics

Analyzes the behavior of individual agents, such as households, firms, buyers, and sellers, within specific markets.

Macroeconomics

Focuses on the economy as a whole, examining factors like production, consumption, saving, and investment at a national or global level.

Positive vs. Normative Economics

Positive economics describes and explains 'what is,' focusing on facts and cause-and-effect relationships, while normative economics advocates for 'what ought to be,' involving value judgments and opinions.

Microeconomic Agents

Households, firms, buyers, and sellers

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Rational Economics

Predicting economic behavior based on the assumption that individuals make decisions to maximize their own well-being.

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Study Notes

Microeconomics and Macroeconomics

  • Microeconomics analyzes the behavior and decision-making of individual economic units, such as households, firms, and markets.
  • Macroeconomics focuses on the economy as a whole, studying aggregate variables such as inflation, unemployment, and economic growth.

Positive Economics vs. Normative Economics

  • Positive economics is concerned with describing and analyzing economic phenomena, aiming to understand how the economy works without making value judgments.
  • Normative economics, on the other hand, involves making value judgments and recommendations about economic policies and outcomes.

Agents in Microeconomic Analysis

  • Microeconomic analysis may include individual agents such as:
    • Consumers or households
    • Firms or producers
    • Governments
    • Markets

Rational Economics

  • Rational economics focuses on the assumption that individuals and firms make decisions based on rational self-interest, maximizing their utility or profit.
  • It assumes that agents have complete and consistent preferences, and that they make optimal choices given their constraints and available information.

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