Difference Between Micro And Macro Economics

895 Words4 Pages
1. What is the difference between micro and macro economics? Give an example of a microeconomic phenomenon and an example of a macroeconomic one. If you look at the definition of the word micro, some words that come to mind are small and extremely tiny. Therefore, we can look at microeconomics as dealing with small quantities of the whole or specifics. At this end, microeconomics deals with things at an individual level and studies issues such as consumer behavior, individual labor market and supply and demand. According to Taylor et al. (2014, pp. 14), microeconomics studies questions like “what determines how households and individuals spend their budgets? What determines the products, and how many of each, a firm will produce and sell?”…show more content…
Minimum wage can also affect employment. Whenever there is an increase in minimum wages the number of persons hired by a business will decrease thus unskilled persons will find it more and more difficult to attain jobs. This can thus lead to greater unemployment, homelessness and crime rates. It can also have positive effects on an individual level. Higher wages means that there would be more money available to deal with expenses and when the minimum wage level is increased, higher level wages increase as well. However, there are also disadvantages. When the minimum wage level increases businesses may mechanize to cut back on cost which would lead to greater unemployment. This article was very interesting because I used to think of the increase of minimum wages from purely a positive perspective but after reading this article, I have come to realise that this increase can also have very negative consequences for individuals and the society as a whole. 3. Provide an example of a sunk cost. How does this differ from a marginal cost? Explain a time you did (or should have) used marginal analysis to solve a problem. Sunk costs are expenses that have been paid out already and cannot be regained. For example, if a clothing and textiles company chooses to buy a new type of material to make clothes that are said to
Open Document