Mt445 Assignment

Lydia Robinson

MT-445-02: Managerial Economics

Unit 1 Assignment

8.6.2013

1. Determine whether each of the following is primarily a microeconomic or a macroeconomic issue:

It is important to know the definitions to each one before answering the questions.  According to freedictionary.com microeconomic is the study of the operations of the components of a national economy, such as individual firms, households, and consumers.  Macroeconomic is the study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors.

i. Setting the price for a cup of coffee.

Answer is Microeconomic issue because it refers to the price of an individual good.

ii. Measuring the impact of tax policies on total household spending in the economy.

Answer is Macroeconomic issue because it refers to the economy as a whole.

iii. A household’s decision regarding whether or not to go on vacation.

Answer is Microeconomic issue because it refers to the decision of a household.

iv. A worker’s decision regarding which job to accept.

Answer is Microeconomic issue because it refers to the decisions of a worker.

v. Designing government policies to address issues with the social security program.

Answer is Macroeconomic issue because it refers to decision making dealing with the economy as a whole.

2. Determine whether each of the following is a positive or normative economic statement.

i. A 40-cent-per-pack tax on cigarettes will reduce teenage smoking by 10 percent.

Answer is Positive economic statement because it concerns what is or will be.

ii. The federal government should spend more on diabetes research.

Answer is Normative economic statement because it expresses a judgment about what ought to be.

iii. Rising paper prices will increase book prices.

Answer is Positive...