Question

1. What is the difference between microeconomics and macroeconomics? Provide an example of each.

2. Price discrimination. How can this be a good thing for you personally?

3.   Illustrate (draw) and explain the Laffer Curve. Where are we currently as a nation (in your opinion) on the Laffer Curve?

Answer 1

Solution- MICRO ECONOMICS It studies the individual units. Micro economics Studies particular firm, inclividual ho household, Individual prices, wages, Income! Individual Industry and particular Commodity. For example - If we study the problem of automobile Industry then it is a study of Micro Econonics = Mauro ECONOMICS is a study of aggregates. 14 ste studies the problem like unemployment, general price rise , economic stability and economic growth, Aggregate supply and Aggregate demand in the economy. Example - If we OR Inflation study in the the rising economy ¢ is general prices the study of Macro ECONOMICS. Price Discrimination is the policy monopolist uses. H in this they charges elifferent prices to the different Consumer for same product They charges high pria to the Enclastic clemand market and lessen in the market where the demand is to more clastic

good It could be for producer as he can maximise his profit by charging different prices. Sometime producer is getting loss in one market (Normally in clastic markets, by Charging higher price in inelastic market he could off-set his bossen losses or malce normal profit. Lafler Curre shows the relationship between Revenue Maximised Revenue Tax revenu and Tax rates. Laffer Curve It says when tax rates are increased initially there Tax Rate will be higher revenue. But after a tax rate (o-T) where revenue maximin there will altes be that it tax lesser vevenu rates for are the increased government. In India Now there is highe tax rates as Compare to other countries and Consequently & low tax to GDP ratio.