14.What are the two sides of opportunity cost?

But there are two sides of the coin of opportunity cost. One is forgone value resulting from scarcity, and the other is opportunity. There would be no opportunity costs without opportunity. If there were only one thing you could do with your time and talents, there would be no cost of doing it. The larger the number and the more valuable the opportunities you have, the better this increases the cost of the choices you make.

3. MICROECONOMICS VS. MACROECONOMICS

1.What is economics?

Economics is the systematic study of choosing which goods and services will be produced and consumed to satisfy society’s wants

2.Why is economics considered a social science?

Since economics involves interactions among members of society it is a social science that studies the behaviour of people in producing, distributing, exchanging, and consuming goods and services. Understanding economic behaviour and the ways in which economic activity is organized and coordinated are at the heart of economics.

3.What is microeconomics?

Microeconomics is the study of individual consumers and business firms who make choices on such matters as what to buy and what to sell, how much to work and how much to pay, how much to borrow and how much to save.

4.Why does microeconomics focus on?

Microeconomics focuses on how individuals and firms behave, how they interact in the market place, and how these interactions establish a price and allocate scarce resources.

5.Why does microeconomics trace cause-and-effect relationship?

Microeconomics is not used to determine how a specific individual will act, since it examines how an “average” individual will probably behave under a specific set of conditions. It traces cause-and-effect relationships that influence choices of individuals, businesses and society and is concerned with issues such as scarcity, choice and opportunity costs, and with production and consumption.

6.What economic issues does microeconomics do with?

It traces cause-and-effect relationships that influence choices of individuals, businesses and society and is concerned with issues such as scarcity, choice and opportunity costs, and with production and consumption. Principal emphasis is given by microeconomists to the study of prices and their relationship to any economic units.

7.What is macroeconomics?

Macroeconomics is the study of the economy as a whole. Macroeconomics seeks solutions to macroeconomic problems such as how fast the economy is developing, how employment can be increased, what can be done to increase the overall output of goods and services, how much total income is, how inflation will effect economic growth and how different governmental policies can be used to stabilize the level of business activity in the economy.

8.What economics issues does macroeconomics look at?

Macroeconomics looks into the combined effect of individual choices on the overall performance of the economy reflected by such economic indicators as the nation’s price level, total production, and level of employment.

9.Why does macroeconomics look into the total effect of individual choices?

Just as the whole consists of the sum of its parts, the economy is ultimately driven by individual choices. Thus, an investigation of the big picture – of economic aggregates* such as unemployment and inflation – must begin with an understanding of the individual choices behind those aggregates.

10.What are two worlds that economics deal with?

Everyone should realize that economists deal with two worlds: the “world that is”, and the “world that ought to be”.

11.What is an economic model?

Economists have developed and generally agree on basic economic principles and economic models that try to explain or describe the “world that is”.

12.What do economists use to explain or describe the ‘world that is’?

Economists have developed and generally agree on basic economic principles and economic models that try to explain or describe the “world that is”.

13.Why do economists make the positive-normative distinction?

To the economists the positive-normative distinction is useful because it helps people with very different views about what is desirable to communicate with each other.

14.What is the difference between positive economic statement and normative one?

Positive economics looks at the facts and the economy as they actually are, avoiding value judgements* and attempting to seek scientific bases about economic activities. Normative economics, on the other hand, is concerned about what ought