Question

1-4 Economic Theories and Models Are the following topics ones that would be covered in microeconomics or macroeconomics? Explain. The effects of an increase in the supply of lumber on the home-building industry Changes in the national unemployment rate Changes in the inflation rate Changes in the country’s economic growth rate The price of concert tickets?

Answer 1

Increase in supply of lumber will reduce the price of lumber. As lumber are used to produce furniture, it will reduce the cost of furniture while building home. When there is overall reduce in building home, people will demand more for home.

When there is more hone build, more labor and workers would be employed to complete the task, there would be increase in employment rate with fall in unemployment rate.

When more labor is hired means there is more demand of labor which would raise the wage rate. As the wage rate will increase, workers will have more money in their pockets which will raise their willingness to pay for goods. This will raise the prices of goods and hence inflation.

When more houses are built, more goods are consumed due to more wage paid, economy would experience GDP growth.

Price of concert tickets are not directly related to it but if there is overall inflation in the economy, price of concert ticket can also rise.