Please take a look at Picture 1 and Picture 2 carefully What

Please take a look at Picture 1 and Picture 2 carefully. What is the first thing that comes to your mind when you look at these 2 pictures. Please explain as clearly as possible what economic concept do these pictures depict. Hint: This is a very important concept that you have learned in this class.

Solution

In picture 1, we cannot see each sapling separately from the other. All saplings create a whole in this picture. Therefore, picture 1 is about macro view i.e. all micro-elements taken together to reflect the whole picture. Therefore, picture 1 relates to macroeconomics. In macroeconomics, we study the economy as a whole and not the constituents separately.

In picture 2, we can focus on each tree separately. Therefore, we can have a macro-view on each element of the picture separately. Therefore, picture 2 relates to micro-economics. In microeconomics, we study the economic decisions in the individual, firm or group level and not at the aggregate level.