Microeconomics Week 2

Question 1

Study of individuals, households, and firms behavior in decision making and allocation of resources

Answer 1

Microeconomics

Question 2

behavior of individual consumers and producers in detail is analyzed

Answer 2

Nature of analysis

Question 3

divides the economy into various small units and every unit is analyzed in detail

Answer 3

Method

Question 4

involves product pricing, factor pricing and theory of welfare

Answer 4

scope

Question 5

useful in formulating various policies, resource allocation, public finance, international trade

Answer 5

application

Question 6

assumption of ceteris paribus is always made in every micro economic theory

Answer 6

Nature of assumptions

Question 7

other things being same

Answer 7

ceteris paribus

Question 8

Prices of individual commodities are determined by market forces of demand and supply

Answer 8

Commodity pricing

Question 9

Land, labor, capital and entrepreneur, all factors contribute in production process so they get rewards in the form of rent, wages, interest and profit respectively

Answer 9

Factor pricing

Question 10

Deals with optimum allocation of available resources and maximization of social welfare

Answer 10

Welfare theory

Question 11

studies behavior of individual consumer or producer in a particular situation

Answer 11

Individual behavior analysis

Question 12

Resources are already scarce i.e. less in quantity

Answer 12

Resource allocation

Question 13

decides prices of various goods and services on the basis of demand-supply analysis

Answer 13

Price mechanization

Question 14

helps in formulating various economic policies and plans to promote all round economic development

Answer 14

Economic policy

Question 15

explain operating of a free enterprise economy where individual has freedom to take his own economic decisions

Answer 15

Free enterprise economy

Question 16

helps the government in fixing the tax rate and type of tax

Answer 16

public finance

Question 17

helps in explaining and fixing international trade and tariff rules

Answer 17

foreign trade

Question 18

not only analyze economic conditions but also studies the social needs under different market conditions

Answer 18

Social welfare

Question 19

especially in case of full employment assumption which does not exist practically

Answer 19

Unrealistic assumptions

Question 20

based on the information dealing with individual behavior

Answer 20

Inadequate data

Question 21

It assumes that all other things being equal (same) but actually it is not so.

Answer 21

Ceteris paribus

Question 22

Simplified representation of how two or more variables interact with each other

Answer 22

Theory

Question 23

Comparison of two different economic outcomes before and after a change in some underlying exogenous parameter

Answer 23

Comparative statics

Question 24

Complex approach for the study of economic variables

Answer 24

Dynamic analysis

Question 25

Neglects the way in which changes in one market affect other product/factor markets.

Answer 25

Partial equilibrium

Question 26

analyses the way in which the choices of economic agents are coordinated across all product and factor markets

Answer 26

General equilibrium