1) Microeconomics is NOT concerned with the behavior of: CLO: KN1) a) Aggregate
ID: 1174240 • Letter: 1
Question
1) Microeconomics is NOT concerned with the behavior of: CLO: KN1) a) Aggregate Demand b) Consumers c) Industries d) Firms 2) Macroeconomics deals with: CLO: KN1) a) b) c) d) The behavior of firms Economic aggregates The activity of individual units The behavior of the electronics industry 3) The circular flow of goods and incomes shows the relationship between: (CLO: KN1) a) Income and money b) Wages and salaries c) Firms and households d) Goods and services 4) Total Revenue falls as the price of good increases if price elasticity of (CLO: SK1) demand is: a) Perfectly elastic b) Unitary elastic c) Inelastic d) Elastic CLO: SK1) 5) Cross Elasticity of demand is: a) Negative for commentary goods b) Unitary for inferior goods c) Negative for substitute goods d) Positive for inferior goodsExplanation / Answer
(1) (a)
Aggregate demand is a topic handled by macroeconomics.
(2) (b)
Microeconomics deals with decision making process of individuals and firms, while macroeconomics deals with economic aggregates.
(3) (c)
Circular flow deals with inflow and outflow of income and factors of production among firms and households.
(4) (d)
When demand is elastic (inelastic), an increase in price of the good decreases its quantity demanded more than (less than) proportionately, so total revenue decreases (increases).
(5) (a)
Cross elasticity of demand is negative for complementary goods and positive for substitute goods.
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