Section+Exercise+13+solns - DepartmentofEconomics 2011

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Department of Economics               Spring  2011 University of California, Berkeley         Economics 1    Head GSI: Swetha  Doraiswamy Section Exercise 13 1. Which of the following questions are relevant for the study of macroeconomics and which  for microeconomics? Explain. a. How will the tips for a server, Ms. Martin, change when a large manufacturing plant near  the restaurant where she works closes? This is a microeconomic question because it addresses the effects of a single firm’s actions  (the closure of a manufacturing plant) on a single individual (the waitress). b. What will happen to spending by consumers when the economy enters a downturn? This is a macroeconomic question because it considers how overall spending by  consumers is affected by the state of the entire economy. c. How will the price of oranges change when a late frost damages Florida’s orange groves? This is a microeconomic question because it looks at how a single market (oranges) will be  affected by a shock (the late frost). d.
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Section+Exercise+13+solns - DepartmentofEconomics 2011

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