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Determine whether each of the following topics would more likely be studied in microeconomics or macroeconomics
Determine whether each of the following topics would more likely be studied in microeconomics or macroeconomics.
a. The effect of a large government's budget deficit on the economy's price level
b. The effect of government regulation on a monopolist's production decisions
c. A consumer's optimal choice when buying a flat-screen TV
Expert Solution
a). The effect of a large government's budget deficit on the economy's price level is more likely to be studied in macroeconomics. This is because the government's budget deficit and price level are variables that affect the economy as a whole.
b). The effect of government regulation on a monopolist's production decisions is more likely to be studied in microeconomics. This is because monopoly falls under the units of the economy. The government regulations will only affect monopolist's market, but not for the whole economy's market.
c). A consumer's optimal choice when buying a flat-screen TV is likely to be studied in microeconomics. Consumer's choice about buying a flat-screen Tv is a micro unit in the economy and therefore, it will be studied in microeconomics.
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