Major Differences Between Macroeconomics And Microeconomics

Section One (LO1: a & b)
Question 1
Explain why nations with high living standards and low living standards face the problem of scarcity. If you won $1billion in a lottery, would you escape the scarcity problem?
A nation’s standard of living depends largely on its capacity to produce goods and services. This economic principle explains why all societies face the number one issue in economics which is scarcity. Both nations with high living standards and low living standards face the same economic problem. The problem of scarcity is defined as how a society has limited resources and in conclusion, cannot produce all the goods and services the people wish to have. This economic problem exists because people within the society have endless needs and wants and such resources are limited to fulfil and satisfy the society’s needs. This is where the study of economics comes essential. Economics is the study of how the society manages its scare resources.
If one would win a $1 billion in the lottery, one may not be able to skip scarcity problems. Having a huge amount of money would entail endless wants and desires. The money won in the lottery will be traded off to the resources available within the market. Regardless of how one would use it, the same problem still prevails and that is the limited availability of resources.
Question 2
Explain the three major differences between macroeconomics and microeconomics. Give two examples of area of study to each branch of economics
The field of economics is subdivided into two areas of study. Microeconomics is the study of how individuals and organizations make decisions in terms of allocation of resources and the price of the goods and services being offered. This also includes taxes and laws imposed by the government. They field of microeconomics focuses on the supply and demand and other aspect that determines price levels within the economy. For example, the field of microeconomics would look into how a certain business would maximize its production and capacity in order lower its price and compete with other businesses in the market.
On the other hand, macroeconomics is the study of the behaviours of industries within the economy as a whole. Macroeconomics goes beyond the aggregate supply and demand and focuses on wide phenomena such as the Growth Domestic Product (GDP) and how it is greatly affected by factors such as national income, unemployment, prices levels, inflation, and growth rate. For example, the field of macroeconomics would look into how net exports would affect the GDP of a certain country in terms of the change in the unemployment rate and would look into external borrowings or alternative policies to improve growth in national living standards.
Question 3
What effects have these migration patterns had on the Product Possibility Frontier of Auckland in New Zealand.
The Product Possibility Frontier is an economic model that shows the maximum output combinations of two goods or services an economy can possibly achieve. In Auckland, New Zealand, the strong overseas migration has allowed the country to have international gains through migration. The strong gains in migration for Auckland resulted to strong growth in its population and booste...