Question

The dairy farmers are individual decision-making units; so are the consumers who purchase milk. How do they decide what courses of action are in their own best interests? How are these millions of decisions coordinated by the market mechanism, and with what consequences?" Questions like these are the substance of

normative economics.


positive economics.


microeconomics.


macroeconomics.

Answer 1

[AI-generated answer — Bot GPT 3.5]

These questions are the substance of microeconomics. Microeconomics is the branch of economics that focuses on the behavior of individual decision-making units, such as consumers and producers, and how their interactions determine prices and quantities in specific markets. It analyzes how individuals and firms make decisions to maximize their own self-interest, and how these individual decisions are coordinated through the market mechanism to determine overall economic outcomes.