Will you please explain the difference between microeconomics and macroeconomics?
Microeconomics focuses on the individual, whereas macroeconomics focuses on the big picture. The easiest way to think about microeconomics is that it will focus on a particular firm and what it is doing. But macroeconomics will focus on the economy of a country as a whole.
Could you please explain the difference between elastic and inelastic goods.
Inelastic goods are goods that do not respond very much to a change in the price of the product. For example, insulin is an inelastic good because even if the price goes from $100 to $1000 people still have to buy insulin if they have diabetes. An elastic good is a good that a consumers respond a lot to a change is the price of. For example, people will buy Oreos when they are $2 but if price increases, even by the smallest amount, people will switch to buying a different product.
What is the difference between absolute advantage and comparative advantage?
Absolute advantage is when one country is the best at producing a particular product or products. For example, the United States might be the most efficient at producing both computers and t-shirts. But comparative advantage means that while the United States might have the absolute advantage in both it might actually be more beneficial to trade with another country for example China. If the United States can produce 2 computers or 5 t-shirts per hour, that means in order to create 2 computers we have to give up 5 t-shirts. But if China can produce 1 computer and 3 t-shirts per hour. That means that they only have to give up 1 computer to create 3 t-shirts which are better than the United States has to give up 2 computers to only create 5 t-shirts.