Question

1.

 The basic difference between macroeconomics and microeconomics is that

 A). Macroeconomics looks at the forest (aggregate markets); while microeconomics is concerned with the individual

 trees (subcomponents).

 B) Macroeconomics is concerned with policy decisions, while microeconomics applies only to theory.

 C). Microeconomics is concerned with the forest (aggregate markets), while macroeconomics is concerned with the

 trees (components).

 D). Opportunity cost is applicable to macroeconomics, and the fallacy of composition relates to microeconomics.

 E). Micro deals with scarcity while macro does not.

 2.

 A store remains open from 8 am to 4 pm each weekday. The storeowner is deciding whether to

 stay open an extra hour each evening. The owner's marginal benefit

 A). is equal to revenues minus operating costs.

 B) depends on the revenues the owner makes during the day.

 C). must be greater than or equal to the owner's marginal cost if the owner decides to stay open.

 D). is the benefit the owner receives from staying open from 8 am to 5 pm.

 E) is equal to revenue plus costs.

 3.

 The term "ceteris paribus" means

 A) the greatest good for all.

 B) value free and testable.

 C) all other things remaining equal.

Answer 1

1. Microeconomics is a branch of economics which focuses on an individual's behaviour and about other micro concepts. Whereas macroeconomics focuses on the aggregate behaviour of the economy as a whole. Hence the answer will be:

A. Macroeconomics looks at the forest (aggregate markets); while microeconomics is concerned with the individual trees( subcomponents).

2. The store owner will stay open an extra hour each evening only when the marginal benefit that the owner will receive from opening an extra hour is at least equal to or greater than the marginal cost that the store owner will have to bear from opening the store. Hence the answer will be:

C. must be greater than or equal to the owner's marginal cost if the owner decides to stay open.

3. The term "ceteris paribus" means:

C. all other things remaining equal.