Macro final

Indicate whether each of the following is primarily a microeconomic issue or a macroeconomic issue: a. The effect of higher cigarette taxes on the quantity of cigarettes sold b. The effect of higher income taxes on the total amount of consumer spending c. The reasons for the economies of East Asian countries growing faster than the economies of sub Saharan African countries. d. The reasons for low rates of profit in the airline industry

a. micro b. macro c. macro d. micro

Simplified versions of reality designed to analyze "what is" to explain human decision making in any context

economic models

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. An optimal decision occurs when

marginal benefit=marginal cost

Suppose an analyst evaluates whether it is a good idea to pass free trade laws. This is an example of:

normative analysis

Canada has a market economy. As such, Canada's economy (relative to centrally planned economies) tends to result in

productive efficiency and allocative efficiency but not necessarily equity.

Economists assume that people are rational in the sense that

they use all available information as they take actions intended to achieve their goals.