Determine if each of the following subjects would be more likely
be studied in microeconomics or macroeconomics. The effect of government regulation on a monopolist’s output
the decisions. The government’s decision on how much to spend on
projects. The effects of the Internet on used car prices.
Answer: 1) The answer is microeconomic theory.
The production decision of the monopoly means that the individual production
decision. Thus, “the effect of government regulation on the monopoly
production decision” is a study of microeconomic theory. Why
microeconomic theory studies individual decisions.
2) The answer is macroeconomic theory.
By public project, we mean the project of all people in the whole economy.
Thus, the decision of government spending on public projects is a study
macroeconomic theory. Because the study of macroeconomic theory
the whole economy.
3) The answer is microeconomic theory.
The price of the used car is an individual decision. Thus, “the effect
Internet in Used Car Pricing” is a microeconomics study
the theory. Because microeconomic theory studies the individual