Microeconomics is defined as that part of economic analysis which studies the behavior of the economy as a whole. A Macroeconomist would study all of the following issues except the impact of a change in consumer income on the sales computers. An appropriate test of the effectiveness of an economic model is the number of variables contained within the model. One reason why economists often use models in their analysis is that a model helps us to understand, explain, and predict economic phenomena in the real world. Macroeconomics is the study of how firms strive to maximize their profits.
Economists assume people behave rationally, which means that people never make mistakes.
A good economic model Utilizes only the two most factors to analyze the problem under consideration. Normative economic analysis involves positive analysis. In every economic system, choices must be made because resources are unlimited, but human desires and wants are limited. are limited, but human desires and wants are unlimited. are unlimited, and so are human desires and wants. The production possibilities curve represents the maximum amount of labor and capital available to society. The production possibilities curve bows outward because opportunity costs are decreasing as the production of a good increases.