Microeconomics
Question 1) With examples give 5 reasons why the study of microeconomics is important.
Microeconomics is a field of economic study that focuses on how an individual 's behaviour and decisions affect the supply and demand for goods and services. For the purpose of microeconomics, the actions of individuals, households and businesses are crucial, unlike the study of macroeconomics, which focuses on national and international economic trends. Despite the differences between the two fields, however, micro-level trends and the study of microeconomics are considered the basis of modern macroeconomics. Macroeconomics is concerned with the big picture, for example, the national economy and gross domestic product. By contrast, microeconomics is concerned with the small picture and focuses on theories of supply and demand.
Firstly, microeconomics is very important in business, especially when it comes to a new business. Entrepreneurs create businesses by purchasing and utilizing factors of production. In order to estimate the potential return on investment (ROI) of those factors of production, entrepreneurs must have a basic knowledge of microeconomic concepts such as supply, demand, cost and profit. Without the basics of microeconomics, it is impossible to know how much a particular good can be sold for in a particular area. Furthermore, without microeconomic basics on costs and earnings, it is impossible to estimate ROI, thus will lead to poor financial investments. Microeconomics is very useful in business decision making. It helps business to achieve maximum production with the given amount of resources. Business firms can make decisions in demand analysis, cost analysis and methods of calculating prices. Second, marketing people must have a basic understanding of microeconomics so that they can set prices for products and decide in which markets to sell those products. For example, with an understanding of microeconomics, a computer company marketing manager can
Microeconomics is a field of economic study that focuses on how an individual 's behaviour and decisions affect the supply and demand for goods and services. For the purpose of microeconomics, the actions of individuals, households and businesses are crucial, unlike the study of macroeconomics, which focuses on national and international economic trends. Despite the differences between the two fields, however, micro-level trends and the study of microeconomics are considered the basis of modern macroeconomics. Macroeconomics is concerned with the big picture, for example, the national economy and gross domestic product. By contrast, microeconomics is concerned with the small picture and focuses on theories of supply and demand.
Firstly, microeconomics is very important in business, especially when it comes to a new business. Entrepreneurs create businesses by purchasing and utilizing factors of production. In order to estimate the potential return on investment (ROI) of those factors of production, entrepreneurs must have a basic knowledge of microeconomic concepts such as supply, demand, cost and profit. Without the basics of microeconomics, it is impossible to know how much a particular good can be sold for in a particular area. Furthermore, without microeconomic basics on costs and earnings, it is impossible to estimate ROI, thus will lead to poor financial investments. Microeconomics is very useful in business decision making. It helps business to achieve maximum production with the given amount of resources. Business firms can make decisions in demand analysis, cost analysis and methods of calculating prices. Second, marketing people must have a basic understanding of microeconomics so that they can set prices for products and decide in which markets to sell those products. For example, with an understanding of microeconomics, a computer company marketing manager can
References: Question 1 reference: Importance of microeconomics, http://www.slideshare.net/tribhuwan64/presentation-on-importance-of-microeconomics Importance of microeconomics, http://www.ehow.com/info_8301181_importance-microeconomics-business.html Question 2 reference: Microeconomics for Today, books.google.com.my/books?isbn=0538469447 Basic Tools in Economics, http://wikieducator.org/Basic_Tools_in_Economic_Analysis