Micro And Microeconomic Analysis
What is the difference between micro and macroeconomics? Give an example of a microeconomic phenomenon and an example of a macroeconomic one.
Micro and macroeconomics describe the same concept of economics at different levels hence they are intertwined ideas. Microeconomics is concerned with individuals in the economy like households, workers and business (Taylor & Greenlaw, 2016). It concentrates on how business establishes prices, how it is affected by taxes and it explains the concept of demand and supply. Whereas, macroeconomics focuses on the issues of the economy as a whole for example Gross Domestic Product (GDP), unemployment rates, inflation and government deficit therefore it reveals the bigger picture of the economy.
An example of microeconomics is how an …show more content…
This brings out the idea of opportunity cost. Certainly there were certain costs forgone by closing the homes and reducing operations. This scenario of the country as a whole can be illustrated on a production possibility curve if you want to compare with other services that are given as an option.
3. Provide an example of a sunk cost. How does this differ from a marginal cost? Explain a time you did (or should have) used marginal analysis to solve a problem.
An example of a sunk cost I can think of is in agriculture. For instance a farmer planted maize on 30 hectares of land using USD 400 as capital to buy inputs. He anticipated harvesting 15 tonnes and selling each tonne for USD 600. Unfortunately the farmer misread the weather patterns and he planted his crops earlier than the rains and his crops did not do well. The farmer faces a very difficult decision of either forgetting the earlier planted crops and replant new crops when the rain falls, or just wait and harvests the little he is going to get from earlier planted crops. The crops that did not do well and costed him USD400 are an example of a sunk
Micro and macroeconomics describe the same concept of economics at different levels hence they are intertwined ideas. Microeconomics is concerned with individuals in the economy like households, workers and business (Taylor & Greenlaw, 2016). It concentrates on how business establishes prices, how it is affected by taxes and it explains the concept of demand and supply. Whereas, macroeconomics focuses on the issues of the economy as a whole for example Gross Domestic Product (GDP), unemployment rates, inflation and government deficit therefore it reveals the bigger picture of the economy.
An example of microeconomics is how an …show more content…
This brings out the idea of opportunity cost. Certainly there were certain costs forgone by closing the homes and reducing operations. This scenario of the country as a whole can be illustrated on a production possibility curve if you want to compare with other services that are given as an option.
3. Provide an example of a sunk cost. How does this differ from a marginal cost? Explain a time you did (or should have) used marginal analysis to solve a problem.
An example of a sunk cost I can think of is in agriculture. For instance a farmer planted maize on 30 hectares of land using USD 400 as capital to buy inputs. He anticipated harvesting 15 tonnes and selling each tonne for USD 600. Unfortunately the farmer misread the weather patterns and he planted his crops earlier than the rains and his crops did not do well. The farmer faces a very difficult decision of either forgetting the earlier planted crops and replant new crops when the rain falls, or just wait and harvests the little he is going to get from earlier planted crops. The crops that did not do well and costed him USD400 are an example of a sunk