Microeconimcs is the branch of economics that studies and analyzes the market behavior of both individual firms and consumers to help understand the decision-making process of companies and households. It analyzes the relationships between both buyers and seller and at the same time studies the factors that influence the choices of both those parties. Lots of people get Macroeconimics confused with Microeconomics, and the main difference is that Macroeconomics forcuses on the bigger picture. While Macroeconimcs focuses on the national economy as a whole and the basics of the business world, Microeconomics focusses on just the opposite, this being supply and demand and how small businesses price different merchandise. The main building blocks that make-up Microeconomics include; Supply and Demand, Markets, Elasticity, Oppurtinity cost, marginal analysis, and cost-benefit analysis.
Supply and Demand is made up of two important laws, The Law of Supply and the Law of Demand. Investopedia.com defines The Law of Supply as all other things remaining equal, as the price of a good increases (decreases), the quantity of that good supplied will increase (decrease). The same site describes the Law of Demand as all other things remaining equal, as the price of a good or service increases (decreases), the quantity of that good demanded will decrease (increase). The Law of Supply and Demand can be demonstrated in a fairly simple graph. On the X-axis you have quantity of a certain item such as milk, and on the Y-axis you may have price of milk. The lower the price is for milk the higher the quantity demanded for it will be, and the higher the price of milk the lower the quantity demanded of it will be. When making a graph of this sort the suppl...
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...l to a business in order to see where the equilibrium price is and how much they can charge to maximize demand and profit. Market elasticity is a way for producers and consumers to understand the business world better, and know what times of the year a product might show more elasticity than others. Opportunity costs, Marginal analysis, and cost-benefit analysis are all key devices in deciding whether good business decisions are in facts being made, and the negatives are not out weighing the positives. Knowing how to use all of these tools is necessary for anyone who is going into the business world whether they are running a small business such as a store that sells fresh dairy products or a company that sells mountain bikes. Everything is tied together by the principles of Microeconomics and without them business’s would not be thriving as much as they are today.
In economics, particularly microeconomics, demand and supply are defined as, “an economic model of price determination in a market” (Ronald 2010). The price of petrol in Australia is rising, but the demand remains the same, due to the fact that fuel is a necessity. As price rises to higher levels, demand would continue to increase, even if the supply may fall. Singapore is identified as a primary supplier ...
The law of supply shows how much will be sold of a good at a certain price. If this were demonstrated on a graph, it would show an upward slope. As the price of a good rises, more producers will want to supply it. If the price of a good falls, fewer people will want to buy
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...
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.
Price Elasticity is the measure in responsiveness of consumers to changes in the price of a product or service. The evaluation and consideration of this measure is a useful tool in firms making decisions about pricing and production, and in governments making decisions about revenue and regulation. “Price Elasticity is impacted by measurable factors that allow managers to understand demand and pricing for their product or service; including the availability of substitutes, the consumer budgets for the product or service, and the time period for demand adjustments.” The proper consideration of Price Elasticity allows managers to set pricing such that the effect on Total Revenue is predictable and adjustments to production are timely. The concept of Price Elasticity is employed in the management of commercial firms and government.
To understand the world we live in today, we need to understand what economics is and where it came from. Economics is the social science concerned with the production and consumption of goods, services, and the analysis of the commercial activities of a society. Economics also deals with the choices we make to fulfill our wants and needs and how we spend and invest our money. It is split into two main parts known as macroeconomics and microeconomics. Macroeconomics is the study of national or international economies while microeconomics studies individuals or firms within the economy. Adam Smith is widely known as the founding father of modern day economics, but it is actually an Irish banker Richard Cantillon. Richard Cantillon wrote his book “Essai sur la Nature du Commerce en General" which translates to “An Essay on Economic Theory” in the 1730’s
From classroom to a cocktail party, having knowledge in today’s economics is definitely an asset when it comes surviving in the world of business. Cocktail Party Economics, by Eveline Adomait, and Richard Maranta undeniably satisfies as an economic training book, helping you understand the concepts of basic economics. The book brings to light many theories and thoughts, which are explained in a certain way that help readers easily, compare and relate them to each other. During the first couple chapters of the book, the main theories presented are scarcity, value, opportunity cost, production, and absolute/comparative advantage. Believe it or not, all of these theories are relatable to Supply and Demand; the two concepts introduced in chapters six and seven.
The law of demand states that as the price of a good or service decreases, the quantity demanded increases, ceteris paribus, and vice versa. We see on the YoYo Yogurt’s demand curve that at $2.50 (which is closest to the actual price), the market demand we obtained is 109 per month. This helps as we can look at the graph and see what the quantity demanded at the actual price ($2.60) is. If we look at the graph, at the $2.60 mark, the quantity demanded is a bit lower than at $2.50, as it is about 95 per month.
It is the study of resource allocation, distribution and consumption, of capital and investment, and of the management of the factors of production. (http://wikitionary.org/wiki/economics)
Economics is the study of how best to allocate scarce resources throughout an entire market. Economics affect our lives on a daily basis, whether it is on a business level or a personal level.
In conclusion, generally speaking the Law of Supply states that when the selling price of an item rises there are more people willing to produce the item. Since a higher price means more profit for the producer and as the price rises more people will be willing to produce the item when they see that there is more money to be earned. Meanwhile the Law of Demand states that when the price of an item goes down, the demand for it will go up. When the price drops people who could not afford the item can now buy it, and people who are not willing to buy it before will now buy it at the lower price as well. Also, if the price of an item drops enough people will buy more of the product and even find alternative uses for the product.
Economics is defined as is the social science that studies the production, distribution, and consumption of goods and services. It primarily deals with the exchange of value and that labor or human effort is the source of all value. The field may be divided in other ways, most commonly microeconomics vs. macroeconomics. Microeconomics examines the economic behavior of individual units, including businesses and households, and their interactions through markets, given scarcity and government regulation. Macroeconomics examines an economy as a whole "top down" with a view to understanding interactions between the broadest aggregates such as national income and output, employment and inflation and broad aggregates like total consumption and investment spending. Econometrics is the application of statistical techniques to measuring economic phenomena.
Microeconomics is the study of an individual economy, or of the different segments within the larger economy, while macroeconomics is the study of aggregate economic behavior, or the economy as a whole(Madura 103). The main goal of macroeconomics is to determine the impact of consumer spending on total output, employment, and prices.
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.
Managerial decisions are an important component in achieving the objectives of the organization. The success or failure of a business depend upon the decisions made by managers (Jurina, 2011). Today’s increasing complexity in the world of business brought forth greater challenges for both the firm and its managers. The rapid rate of technological and digital advance as well as greater focus product innovation and processes that influence marketing and sales techniques have contributed to the increasing complexity in the business environment.