Question

Microeconomics comes to some strange sounding conclusions: • Because something is broken, doesn't mean it should be fixed • Given that imperfection exists, we're probably better-off with some optimal amount of it • It's possible to have too little pollution • It's possible to have too little crime Explain the common logic behind these statements. (12 points)

Answer 1

Answer: Microeconomics deals with the unearthed economic functionalities and the minute economic changes that define the all-round progress and growth of the economy. At various junctures it has ben found that microeconomics has come up to some of the strangest of conclusions such as, because something is broken, doesn’t mean it should be fixed, given that imperfections exists we are probably better off with some optimal amount of it, its possible to have too little solution, its possible to have too little crime etc. All these strange conclusions comes in to picture with the micro-economic thought process that an economy may encounter any situation at any given point of time and that the economy should be ready to accept the situation that exists and try to find its way out of the situation (if grave) and try minimize the level of damage to the economy and maximize the level of optimal output that can be accrued out of all the available resources in the economy so that a balanced and a progressive growth can be achieved for the economy.