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.