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Which of the following topics is more likely to be studied by microeconomists than by...

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tcp1215 | eNotes Newbie

Posted May 31, 2013 at 2:57 PM via web

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Which of the following topics is more likely to be studied by microeconomists than by macroeconomists?

1. The effect of government tax policy on long-term economic growth

2. The government's optimal spending level

3. The effect of a cigarette tax on the quantity of cigarettes sold

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 31, 2013 at 3:11 PM (Answer #1)

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Of these, only choice #3 is something that would be studied by microeconomists.  The other two choices would be studied by people who are interested in macroeconomics.

Microeconomics is the field of economics that looks at smaller chunks of the economy while macroeconomics looks at the economy as a whole.  Microeconomics looks at the decisions made by a single household or a single company.  It can look at the workings of an entire industry, but it cannot look at the economy of an entire country or region.

From this, we can see why choice #3 is the only option that has to do with microeconomics.  The first two options both focus on how the economy as a whole will be affected by the government’s fiscal policies.  By contrast, choice #3 only looks at the effect of taxation on one specific industry.  Since it is looking only at the cigarette industry, rather than at the economy as a whole, it is the only one of these options that is a topic for people studying microeconomics. 

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