tutorial questions week 2
ECON1001 – Microeconomics for Business Decisions
TUTORIAL REVISION EXERCISES Set 1 Working independently, you should prepare written answers to hand in for the questions marked with #. Answers should by Typed.
Answers to the submitted weekly set of revision questions should not exceed 300 words in total. (This excludes diagrams and tables.)
Answers must be submitted to the tutor at the beginning of the tutorial.
Answers to the other questions should also be attempted with notes written down for your own learning benefit.
You should keep a copy of answers so you can contribute to the tutorial discussion and for making notes of correct answers.
Introduction to microeconomics: efficiency, scarcity & opportunity cost
Textbook (J/M/W) 9th ed.) Chs. 1 & 2
1. What is the difference between microeconomics and macroeconomics?
Micro: individual firms etc.
Macro: Economy as a whole
2. What is the difference between deductive and inductive methods in economics when discussing theories?
Deductive: Beginning with theory, testing with facts
Inductive: Deriving of theory starting with facts
3. What is the ceteris paribus assumption? Why is it used in economics?
All other factors remain the same, e.g. the demand curve for a can of Coke is not affected by the weather. Used because if we don’t use it there are too many variables, making whatever we are trying to figure out near impossible to do
4. What is the difference between positive and normative statements in economics? Relate this to the “Economics of global warming” article at the end of chapter 1 of your J/M/W textbook.
Positive: Based upon what is currently occurring, without value judgements. i.e. “the costs of not doing anything would likely reduce outputs by 20% in the future” etc.
Normative: Based upon subjective beliefs of ‘what ought to be’, i.e. Stern’s recommendation to incentivize people to reduce pollution
5. Explain the terms