IGCSE Economics Paper-2: Specimen Questions with Answers 84 - 85 of 100

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Micro economics is often called price theory or value theory. Macroeconomics perceives the overall dimensions of the economic affairs of a country.

Question 84 (3 of 5 Based on Passage)

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Define Micro economics.

Explanation

Micro means a small part. Microeconomics is thus, the branch of economics which Is concerned with the analysis of the behavior of the individual economics units or variables. Such as:

  • Study of firms
  • Households
  • Individual prices
  • Wages
  • Income
  • Individual industries

Micro economics consist of observing the economy through a microscope, as it were, to see how the millions of cells in the body of economics, i.e.. millions of consumers, producers, etc. act and react while working of whole economic organism. In other words, microeconomics is useful in understanding a firm view of some very specific components of an economic system.

Question 85 (4 of 5 Based on Passage)

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Distinguish between microeconomics and macroeconomics.

Explanation

Microeconomics and Macroeconomics
S. no.MicroeconomicsMacroeconomics
1.Microeconomics is the study of behavior of individual units consumers, firms, and resource-owners.Macroeconomics is the study of the behavior of the whole economy.
2.Microeconomics is individualistic in approachMacroeconomics is aggregative in the methodological approach
3.Microeconomics is concerned with the behavior of micro variables or micro quantities such as demand, supply, particular commodity price wages, etc.Macroeconomics is concerned with the behavior of macro variables or macro quantities like, national income, price level, investment, savings, consumption in an economy etc.
4.It deals with the problem of pricing and income distribution.It pertains to the problems of the size of national income, economic growth and general price level.
5.Microeconomics never uses aggregates relating to economy-wide total. Its scope is limited.Macroeconomics uses aggregates which relate to the entire economy or to a large sector of the economy and when it considers industrial output, it refers to the whole output produced by the industrial sector.

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