Question

Fill in the blanks with appropriate alternatives given in the brackets.

1) The terms Micro and Macro Economics were first used by _______________. (Adam Smith/ Robbins/ Ragner Frisch/ Marshall).

2) Micro Economics is a study of _________. (Whole economy/ general price level/ National output/ Individual economic unit).

3) Micro Economics is also called as ________________. (Income theory/ Price theory/ Growth theory/ Employment theory)

4) Micro Economic analysis adopts __________________ method. (lumping/ aggregative/ Slicing/ inclusive)

5) Micro Economics is a __________________________ equilibrium approach. (partial/ general/ total/ multi-variable).

Answer 1

1) The terms Micro and Macro Economics were first used by Ragner Frisch.
Ragner Frisch of The University of Oslo was the first person to coin the terms ‘Microeconomics’ and ‘Macroeconomics’ in the year 1993. Since then, these terms are used by economists all over the world.

2) Micro Economics is a study of Individual economic unit.
Microeconomics is the study of behaviour of individual units in an economy such as individual consumer, producer and firm.

3) Micro Economics is also called as Price theory.
Microeconomics is also known as the price theory. We know that in Microeconomics we study the behaviour of individual economic units such as the producer and the consumer. Through the study of such behaviour the main focus is the determination of prices (commodities and factor prices) in the market.

4) Micro Economic analysis adopts slicing method.
Microeconomics is the study of behaviour of individual units in the economy. For this purpose, the entire economy is sliced, i.e. divided into several smaller/individual units and each unit is then analysed in detail.

5) Micro Economics is a Partial equilibrium approach.
In microeconomics each of the individual units is studied in isolation. That is, while studying one unit/variable the effect of other units or variables is taken to be constant. It ignores the interdependence of economic variables. In other words, it is based on the assumption of “other things remain constant” (ceteris paribus). Thus, because of this assumption, it is said that microeconomics has a partial equilibrium approach.