Final answer:
In economics, the micro-macro dilemma arises when beneficial individual decisions are not necessarily beneficial for society. This dichotomy is pronounced in market-oriented economies with excessive product differentiation, leading to debates about societal cost versus consumer choice.
Step-by-step explanation:
The micro-macro dilemma in economics refers to a situation where actions that are beneficial at a micro level, such as individual decisions made by businesses or consumers for their own benefit, may not necessarily be beneficial at the macro level, for society as a whole. An example of this is the production and marketing of a vast array of product differentiations. While product differentiation and market competition may be good for businesses engaging in these practices, and possibly for some consumers who enjoy a wide variety of choices, they may also lead to social waste if the societal costs of advertising and producing these minor variations are not justifiable by the overall societal benefit.
Economists debate the merits of a market-oriented economy's tendency to produce excessive varieties of products. Critics argue it leads to wasteful spending, while proponents believe it offers consumers valuable options and drives companies to innovate. The debate also encompasses the role of advertising in fostering monopolistic competition and whether it contributes to or mitigates the micro-macro dilemma.