This paper aimed to show how both macroeconomics and microeconomics plays a role in the overall success of an organization. The key decisions confronting the firm right from inception to operation to growth are themes business, economics can explore and which are useful for entrepreneurs and business leaders. With increasing globalization, the fact that firms now operate in a global arena means that they must have the knowledge of how macroeconomic trends affect macroeconomic decisions.
In economics, demand refers to the product, which an individual is willing to purchase for a specific amount of money. When looking at economics the first thing that comes to mind is supply and demand. In our everyday life, we use different products from toilet
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Elasticity is a when there is a demand in price change and the quantity of the products increases by the consumers. Most consumers like to compare prices while shopping, for instance, when coupon shoppers see prices decrease, and they tend to buy more of the products. However, if the prices increase they spend less money. For example, if the state decides to raise the taxes on cigarette, the prices of cigarettes prices will increase, most chain smokers are addicted and they have no substitutions, the other alternative they have is to keep buying, and the demand will be inelasticity. Another example is clothing. Consumers can choose the type of clothing they want and the price. Price elasticity of demand is always negative, which causes prices and quantity to move in different …show more content…
It examines the characteristics of the economy output, employment, inflation, and the interest rate. Few of macroeconomics indicators includes inflation, public deficits, and unemployment. “Macroeconomic indicators share important characteristics that set them apart from other indicators, such as those covering human rights or government transparency (e.g. Cooley and Snyder 2015).” Macroeconomics focuses on the economy between businesses and individual household. When the economy is operating at its natural level of employment, there could be an increase in unemployment. “The rate of unemployment consistent with the natural level of employment is called the natural rate of unemployment.” When Business experiences a decrease in production, it may generate additional unemployment. Another goal of macroeconomic is economic growth, which is defined as a long-run process that occurs as an economy’s potential output increase.
Conclusion
The conclusion of the research in economics, both macroeconomics and microeconomics have a role they play to help an organization to be successful. Most people have a misconception about economics. The economy places a big part of our everyday life whether it be from purchasing a house or going into business. Customers play a big part in the economics because they help determine the direction that the economy is
The trends in unemployment affect three important macroeconomics variables: 1) gross domestic product (GDP), 2) unemployment rate, and 3) the inflation rate.
The state of the economy is important both on a micro and macroeconomic level. On a macro level, those in government pay close attention to these statistics in order to guide fiscal and monetary policy. On a micro level, households can use this data to guide their consumption and investments, while businesses can use this information in their strategic planning. In looking at economic information, there is current data, historical data, and economic forecasts. This enables decision makers to get a more complete picture of economic trends and see the relationship between various economic indicators.
Seldom do individuals realize the significance of acquiring a proper understanding of economics as a whole, let alone any subfields that branch off of it. Every aspect of economics is relative to another within itself, much like the roots of a tree are relative to the leaves or fruit that it bears. Attempting to distinguish between micro and macroeconomics in terms of significance to the real world is unavailing. Having a formal comprehension of this science begins with the principles and theor...
Normally, if the quantity demanded of a good is very responsive to a change in the good's price, the good is considered to be elastic (Investopedia.com, 2015). Unlike to a product, in which the quantity demanded of the good is very responsive to a change in the product's price, is an inelastic good. Goods that are inelastic show little response in the quantity demanded to a change in price (Jay Kaplan, 2002).
Macroeconomics is the study of the economy as a whole and how larger forces affect an item’s selling price (Colander, 2013). It focuses not on individual decisions, but rather big picture factors such as inflation, unemployment, business cycles, and growth. This is a top down approach. In the scenario, the city has placed a cap on the price of housing. This affects the demand when there is a shift in the population requirements.
Generally speaking, elasticity measures how a dependent variable varies with n independent variable (n = 1 in demand function). Therefore, the elasticity of demand measures the change in quantity with respect to the change in price. The formula of it is:
Microeconomics deals with the study of small individual units that make up an economy. The scope of microeconomics includes – 1.The theory of product, 2.The theory of factor pricing and 3.The theory of Economic welfare.
The law of demand states that if everything remains constant (ceteris paribus) when the price is high the lower the quantity demanded. A demand curve displays quantity demanded as the independent variable (the x-axis) and the price as the dependent variable (the y-axis). http://www.netmba.com/econ/micro/demand/curve/
Critically assess the extent to which “the ideas of economists” might improve the performance of an organisation of your choice.
Studying microeconomics can provide a better understanding of how markets work and how to predict various events that affect the prices and quantities of products in that market. For example: How would an increase in the tax on alcohol affect the number of deaths of young adults on the highway from drunk driving? Research can be used to show that the number of highway deaths of young adults is general proportional to the total amount of alcohol consumed by that group. An increase in the tax on alcohol would make the products more expensive, which would mean that less alcohol will be consumed by young adults. If the new tax on alcohol helped to decrease the amount of alcohol consumed by any percentage, the number of highway deaths by
The Economy is the backbone to society. There are many factors that operate in, and govern our society’s economical structure. Factors such as scarcity and choice, opportunity cost, marginal analysis, microeconomics, macroeconomics, factors of production, production possibilities, law of increasing opportunity cost, economic systems, circular flow model, money, and economic costs and profits all contribute to what is known as the economy. These properties as well as a few others, work together to influence the economy. Microeconomics and Macroeconomics are two major components. Both of these are broken down into several different components that dictate societal norms and views.
Microeconomics may reveal outcomes as assured; therefore it is overdetermined, and this is contrasted with macroeconomics as being underdetermined. Understanding the principles of microeconomics is untroubling for economists when they gain an ability to contemplate systems. Moreover, the natures of truth in the world of microeconomics can be puzzling, but there are some foundations which allow flotation of the proverbial watercraft.
The study of economics is important to everyone. Financial decisions affect everyone in their day-to-day routines. Economics is the study of how society manages its scarce resources (Mankiw, 2012). Macroeconomics is the study of economy wide phenomena, including inflation, unemployment, Gross Domestic Product, and economic growth (Mankiw, 2012). Macroeconomics is important because, it is how all of us relate into markets and economies. Many news articles today are centered on the economy and current events. One of these articles lends itself to many economic principles and ideas. Even though there are many important topics not covered in the article, the article titled, "You Are What You Owe" in Time, encompassed many general economic principles as well as the many macroeconomics indices illustrated in the article.
Macroeconomics is the study of the economy as a whole, which looks at economic growth, unemployment and inflation. (Dobson and Palfreman, 1999) Government macroeconomics objectives can dividend into
What is Microeconomics? This question was left unanswered when I initially enrolled in this course. Microeconomics is the social science that studies the implications of individual human actions, specifically about how those decisions affect the utilization and distribution of scarce resources. Microeconomics shows how and why different goods have different values, how individuals create more efficient or more productive decisions, and how individuals best coordinate and cooperate with one another. Microeconomics does not try to explain what should happen in a market, but instead only explains what to expect if certain conditions change. For instance, If the price of the new iPhone 8 is higher than the previous model will the consumer buy it? There are several elements that will play into getting an answer for this question, but gives you a general idea of what microeconomics entails.