Microeconomic Analysis Questionnaire
BEO2264 MICROECONOMIC ANALYSIS
TUTORIAL QUESTIONS
TOPIC 1
Question 1
(a) Discuss how microeconomic theory can help to explain the effects of lowering the minimum wage for teenage employees in the retail industry
(b) How is the usefulness of a theory evaluated
(c) “Observation without theory and theory without observation are equally useless in explaining the complexities of the real world”. Discuss.
Question 2
(a) Distinguish between positive analysis and normative analysis.
(b) The following statements were overheard in a conversation between two students.
Student A: “Making unemployed people work for social security benefits is a poor social policy because it is exploitative”.
Student B: “Making unemployed people work for social security benefits interferes with the workings of the labour market; then both the unemployed and employed will be made worse off”.
Which of the above statements is ‘positive’ and which ‘normative’? Explain your answers.
Question 3
(a) Define nominal prices and real prices. Explain why real prices instead of nominal prices are used in microeconomic analysis.
(b) Explain how demand and supply analysis help to explain the price changes for petrol and university education since the 1980s.
Question 4
(a) What is the difference between the IBM Corporation and the computer industry?
(b) What is the difference between the market for computers and computer industry?
(c) Is the world market for personal computers competitive? Explain your answer.
TOPIC 2: DEMAND AND SUPPLY ANALYSIS
_____________________________________________________________________
Question 1
Suppose that unusually hot weather conditions increase the demand for ice cream. Explain why the price of ice cream will rise to a new market clearing level.
Question 2
Use supply and demand curves to illustrate how each of the following events will affect the price of butter and the quantity bought and sold in
TUTORIAL QUESTIONS
TOPIC 1
Question 1
(a) Discuss how microeconomic theory can help to explain the effects of lowering the minimum wage for teenage employees in the retail industry
(b) How is the usefulness of a theory evaluated
(c) “Observation without theory and theory without observation are equally useless in explaining the complexities of the real world”. Discuss.
Question 2
(a) Distinguish between positive analysis and normative analysis.
(b) The following statements were overheard in a conversation between two students.
Student A: “Making unemployed people work for social security benefits is a poor social policy because it is exploitative”.
Student B: “Making unemployed people work for social security benefits interferes with the workings of the labour market; then both the unemployed and employed will be made worse off”.
Which of the above statements is ‘positive’ and which ‘normative’? Explain your answers.
Question 3
(a) Define nominal prices and real prices. Explain why real prices instead of nominal prices are used in microeconomic analysis.
(b) Explain how demand and supply analysis help to explain the price changes for petrol and university education since the 1980s.
Question 4
(a) What is the difference between the IBM Corporation and the computer industry?
(b) What is the difference between the market for computers and computer industry?
(c) Is the world market for personal computers competitive? Explain your answer.
TOPIC 2: DEMAND AND SUPPLY ANALYSIS
_____________________________________________________________________
Question 1
Suppose that unusually hot weather conditions increase the demand for ice cream. Explain why the price of ice cream will rise to a new market clearing level.
Question 2
Use supply and demand curves to illustrate how each of the following events will affect the price of butter and the quantity bought and sold in