...Microeconomics has a role in society as well as in the economy of a region. This field of study allows economists to determine not only the patterns of consumers, businesses, and other organizations that are spending money but also the factors that are affecting spending habits and production decisions. Microeconomics involves studying the concepts and ideas that establish supply and demand in a particular market and the way that consumers and businesses alike prioritize their spending. Essentially, the role of microeconomics is to determine how, when combined, small economic components are affecting the broader economy. Instead of looking at market indicators that represent a wide field of data, however, this type of study considers how individuals, households, or specific markets are responding to markets. Although this economic approach does not necessarily reveal or determine economic conditions, the process offers insight into the way that consumers and businesses alike decide the value of a particular product or service. This is expressed in the amount of resources that either the consumer or business dedicates to an item. Rather than tallying the way that consumers as a whole are responding to a particular product, for instance, microeconomics begins with the study of the extent of demand stemming from one single consumer. Once this demand has been determined, this study continues and expands to include a greater number of individuals in the assessment. Economists also...
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...Principles of Microeconomics: At a Glance Description of the Examination The Principles of Microeconomics examination covers material that is usually taught in a one-semester undergraduate course in introductory microeconomics. This aspect of economics deals with the principles of economics that apply to the analysis of the behavior of individual consumers and businesses in the economy. Questions on this exam require test-takers to apply analytical techniques to hypothetical as well as real-world situations and to analyze and evaluate economic decisions. Test-takers are expected to demonstrate an understanding of how free markets work and allocate resources efficiently. They should understand how individual consumers make economic decisions to maximize utility, and how individual firms make decisions to maximize profits. Test-takers must be able to identify the characteristics of the different market structures and analyze the behavior of firms in terms of price and output decisions. They should also be able to evaluate the outcome in each market structure with respect to economic efficiency, identify cases in which private markets fail to allocate resources efficiently, and explain how government intervention fixes or fails to fix the resource allocation problem. It is also important to understand the determination of wages and other input prices in factor markets, and to analyze and evaluate the distribution of income. The examination contains approximately 80 questions...
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...Microeconomics and the Laws of Supply and Demand Introduction of Micro and Macro Economics Microeconomics and macroeconomics are used in order to help economists come to conclusions and the economy of a city, state, and country. Microeconomics is the study of the economic decisions and actions of individual people and companies according to the Merriam-Webster dictionary (Merriam-Webster, 2014). This practice is the study of economics on a small scale where macroeconomics will study the whole system (Merriam-Webster, 2014). Principles and Concepts The simulation provided for an in depth experience into an example of supply and demand in the housing market. GoodLife Management is the only apartment owner in the city of Atlantis, because of this GoodLife has a monopoly in this market. This monopoly allows more control over the pricing structure of the apartment living in Atlantis with little outside influence. Even with a monopoly there are a few things that can enhance or diminish the pricing structure of apartment living. An example given was the current state of the economy which did not provide enough income to fill the housing units with the higher rental rates therefore the rates had to be lowered in order maximize profits. Although the state of the economy as a whole is macroeconomic, the cause forces a microeconomic change in the rental rate (University of Phoenix, 2003). The simulation also creates a supply change by building new apartment complexes, which...
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...macro perspective. Microeconomics and Macroeconomics are the two major branches of economics. What is Microeconomics? Microeconomics is the study of how households and firms make decisions and how they interact in markets. So all these problems belong to microeconomics: how the consumer reacts when price changes; how the firms decide the output level and how they decide the production method; how should the firms charge their product prices. Microeconomics also considerate the demand and supply of individual goods and services and the equilibrium occurs when the quantity of demands are equal to the quantity of supplies. A typical example of microeconomics is a mobile phone manufacturer decides to charge what price of their new model of smart phone depends on the demand of the mobile markets. A number of factors would affect the demand of the mobile phone including the price of the product itself, the income of the consumer, the consumer’s amount of accumulated wealth, the price of other competitor’s product, the consumer’s tastes and preferences and the expectations about future income, wealth and prices. The manufacturer also concerns the cost of production of the new model smart phone to decide the price and output level in the market. These decisions include when a consumer (i.e. households) purchases a good and for how much, or how a producer (i.e. firms) determines the price it will charge for its product are the key content of Microeconomics....
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...INTRODUCTION TO MICROECONOMICS A Final Thesis Presented to AIU The Academic Department Of the School of Business and Economics In Partial Fulfillment of the Requirements For the Bachelors Degree in Business Administration Atlantic International University (AIU) @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@ INTRODUCTION TO MICROECONOMICS @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @ Emmanuel Kasozi Atlantic International University (AIU) – School of Business and Economics August 15, 2012 School work, Micro economics @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ Atlantic International University (AIU) CONTENTS 1 1.0. Microeconomics and Business Markets an overview 2.0. Economics is defined 3.0. Opportunity cost 4.0. 3 Production curve 2 5.0. Microeconomics is defined 6.0. Business Markets 7.0. Market 8.0. 8 Assumptions of markets 3 Demand, Supply and market Equilibrium 9.0. 10 Demand 10.0. Factors influencing Demand 11.0. Demand curve 12.0. Ceteris Paribus 4 13.0. Supply 14 14.0. The law of supply 15.0. Supply schedule 16.0. Supply curve 17.0. Factors influencing supply Atlantic International University (AIU) 18.0. Equilibrium 19.0. Reference 21 MICROECONOMICS AND BUSINESS MARKETS An Overview Economics...
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...By and large, managerial decisions are not affected by either microeconomic or macroeconomic forces. B) Managerial decisions are affected primarily by macroeconomic forces. C) Managerial decisions are affected by both microeconomic and macroeconomic forces. D) Managerial decisions are affected primarily by microeconomic forces. 1) 2) Walmartʹs decision in 1994 to continue operating stores in specific cities in Mexico when other firms were pulling out would be best classified as: A) a microeconomic decision. B) a macroeconomic decision. C) both a microeconomic and a macroeconomic decision. D) neither a microeconomic nor a macroeconomic decision. 2) 3) Which of the following would be considered an example of a macroeconomic problem? A) Should Microsoft reduce the price of its Windows operating system? B) Should JP Morgan Chase increase the interest rate it charges its credit card customers? C) Should Mitsubishi eliminate one of its production shifts? D) Should the federal government extend the eligibility period for unemployment benefits? 3) 4) Walmartʹs entry into the market in Mexico had the effect of: A) reducing competition and raising the prices of many of the goods it sells. B) increasing competition and raising the prices of many of the goods it sells. C) increasing competition and lowering the prices of many of the goods it sells. D) reducing competition and lowering the prices of many of the goods it sells. 4) 5) Which of the following statements is false...
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...The study of microeconomics focuses on the behaviors and goals of individuals, firms, and government agencies that actually compose the larger economy. It is essential in the everyday life. Understanding the principles and objectives of microeconomics help towards policy making, and solutions for unemployment. The following are the five most important lessons I believe everyone should take away from this course. The first lesson to take away from microeconomics is how the limits to output are determined and how the interplay of market forces and government intervention utilize and expand those limits. For example, scarcity is an imbalance between available resources and our wishlist for those resources. The resources available for producinging...
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...Supply and Prices in the Housing Industry F. Hill ECO/365 Principles of Microeconomics July 30, 2014 Mr. Keith Watts Abstract The slowdown in the housing market in the US has been accompanied by a sharp fall in house prices and a glut of homes for sale in the market. While the idea that this high number of dwellings for sale should place downward pressure on house prices is intuitive, little empirical work has been done in this area to assess the factors affecting house prices. This paper explicitly models the relationship between changes in prices of houses and various measures of housing demand and supply. A simulation model has been included to help explain the evolution of the housing market and enable one determine the equilibrium price, quantity and prices. The company under consideration is GoodLife management- a property management company that manages seven communities in the city of Atlantis. Keywords: Housing market, supply and demand, price elasticity and economics. Introduction From the demand and supply curve of the firm, various microeconomics and macroeconomics can be identified. Microeconomics looks at the behaviors of individual people and companies within an economy. It is based on the idea of a market economy, in which forces of demand and supply are behind prices and production levels of goods and services. Microeconomics is concerned with supply and demand in individual markets, individual consumer behavior and individual labor markets. Macroeconomics...
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... There are many definition of economics, the earliest definition were usually in term of wealth such as the one by Adam Smith who defined economic as: an inquiry into the nature and causes of wealth of the nation. Later on J.S Mill defined economics as the practical science of production and distribution of wealth. Davenport defined economics as the practical science that treats phenomena from the stand point of price. Prof. pigou in his own definition describes the subject as having a lot to do with welfare while Alfred marshal defined economics as a study of mankind in the ordinary business life. Lord Lionel C. Robbins defined economics as ‘the science which studies human behaviors as a relationship between ends and scarce means which have alternative uses’. It can therefore be safely said that economic is the study of production, distribution, exchange and consumption of goods. And is the study of how society decides what, how and for whom to produce. Economic is divided into two main branches: microeconomic and macroeconomic. MICROECONOMIC Microeconomics deals with the behavior of individuals economic units. These units include consumers, workers, investors, owners of land, business firm:- in fact, any individual or entity that...
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...Microeconomics and the Laws of Supply and Demand Nicholas Perry ECO/365 May 26, 2014 Tarron Khemraj Microeconomics and the Laws of Supply and Demand In the Supply and Demand Concept Simulator, there were several microeconomic and macroeconomic principles covered. Also, there were shifts in the supply or demand curve throughout the simulator, and I will explain the shifts in greater detail. To understand what microeconomic principles were used in the simulator, understanding what microeconomics means is important. Microeconomics is the study or analysis of the economy or market on an individual or business level. It focuses on individual buyers and sellers within businesses. One example from the simulator of microeconomics is when Susan asked me to decrease the vacancy rate to 15 percent. In order to do this, I must decrease the cost of the apartments to try and increase the demand or interest in vacant apartments. The reason this is microeconomics is because the decision a decision made on an individual level and has to do with the buyer and seller only to benefit my business. Susan later asked me to lease out all 2,500 available two-bedroom apartments available. In order to do this, Hal suggest we raise the monthly rental cost for the two bedroom apartments so we can cover the maintenance cost. We have to do this in order to stay profitable. This is microeconomics because again, it is focused around the buyer (renters) and the seller (GoodLife Management). The...
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...employer and individual households (University of Phoenix, n.d.). Macroeconomic Vs Microeconomic Principals Macroeconomics and microeconomics are both subcategories of economics. Macroeconomics involves a much broader approach to the economy and it involves decisions that the government makes in trying to regulate the economy. Microeconomics involves the study of how market demand and supply affect the decisions that households and firms make (Difference Between Net, n.d.) In the scenario that we reviewed, the government made macroeconomic decisions by implementing a price ceiling for rents, also known as a rent control policy. The choices that Goodlife had to make in response to that decision were also macroeconomic because Goodlife had to make a decision to not rent as many apartments, even though it had the capacity to rent more apartments. The government response to that decision would also be macroeconomic. Goodlife engaged in several microeconomic decisions by adjusting the supply of apartments when needed. In year one, Goodlife made a decision to lower rent prices in order to balance the excess supply with the market demand. Goodlife made another microeconomic decision in year three and five by adjusting their rent prices in order to maximize revenue and profits. Demand and Supply Shifts A shift in the demand curve occurs when there is a change in demand that is not related to price (Colander, 2010). A shift in the demand curve occurred when a large employer moved...
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...Microeconomics and the Laws of Supply and Demand Eco 365 Instructed by: The purpose of this paper is to review and discuss how the principles of both macroeconomics and microeconomics are pertinent to many aspects of our daily lives in ways that a mass majority of individuals has never stopped to think about. The discussion herein is based on a simulation involving rental apartments in Atlantis that are all owned by the same company known as Goodlife. It is important to anyone individual or company in their growth to know when to know what a good price is, when to spend money, when to save money, and what to do in between, and to do so you must understand the concept of supply and demand and how to utilize the information. Most people understand the basic aspects of this; however, to be effective one must know the importance of how both macro and microeconomics are to our ways of living. Further at it relates to the simulation, discussions in this paper will consist of identifying both a supply and demand curve and explain what happens when a shift takes place as well as their different areas of impact. Lastly, I will discuss price elasticity and how a persons spending. Macro and Microeconomic Principles Here is a quick review of two important terms and definitions. Pursuant to Colander (2013), “Macroeconomics is the study of the economy as a while” and “Microeconomics is the study of how individual choices are influenced by economic forces”...
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...for Pricing Chapter 10: Market Power: Monopoly and Monopsony We want to translate the condition that marginal revenue should equal marginal cost into a rule of thumb that can be more easily applied in practice. To do this, we first write the expression for marginal revenue: Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall • Microeconomics • Pindyck/Rubinfeld, 7e. 9 of 50 10.1 MONOPOLY A Rule of Thumb for Pricing Chapter 10: Market Power: Monopoly and Monopsony Note that the extra revenue from an incremental unit of quantity, ∆(PQ)/∆Q, has two components: 1. Producing one extra unit and selling it at price P brings in revenue (1)(P) = P. 2. But because the firm faces a downward-sloping demand curve, producing and selling this extra unit also results in a small drop in price ∆P/∆Q, which reduces the revenue from all units sold (i.e., a change in revenue Q[∆P/∆Q]). Thus, Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall • Microeconomics • Pindyck/Rubinfeld, 7e. 10 of 50 10.1 MONOPOLY A Rule of Thumb for Pricing Chapter 10: Market Power: Monopoly and Monopsony (Q/P)(∆P/∆Q) is the reciprocal of the elasticity of demand, 1/Ed, measured at the profit-maximizing output, and Now, because the firm’s objective is to maximize profit, we can set marginal revenue equal to marginal cost: which can be rearranged to give us (10.1) Equivalently, we can rearrange this equation to express price directly as a markup over...
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...The Affects of Monopolies on Our current Microeconomic Situation More than anything else, the progress of the world in the 21st century depends on economics. The microeconomic situation of the United States has several determining factors contributing to it's current status. What we earn, what we save, what we spend, how deligently we work and retain our jobs is all part of the microeconomic system that controls our daiy lives. Another large factor hindering the success or downfall of the current economy is the effect of monopolies. By defintion a monopoly is a large company that has exclusive control of a commodity or service in a particular market giving them the power to manipulate prices. In a sense a monopoly is the logical result of competition. The roles of a monopoly in microeconomics severly affect the manner in which individual businesses can effectivly conduct their business in more than one way. Monopolies have forever affected our economy but these following pages are more of a generalized overview of the affects they have had strictly in the 21st century. One role of a monopoly in microeconomics is the effect it has on the pricing of goods and services. Monopolies can impact consumer prices in two obviously different ways, they can cause prices to drop so low that it forces companies out of business, or it can cause prices to skyrocket making it difficult for consumers to purchase a product. Neither of these options are necessarily good for the consumers...
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...Government regulations in a new market (Author’s name) (Institutional Affiliation) Macro economic theories Microeconomic involves the study of people and the decisions of businesses in an economy. The decisions regard the allocation of scarce resources to the unlimited wants of humans. Microeconomics concentrates on the supply and demand of goods in the economy (Frank & Bernanke, 2004). The forces of demand and supply control the prices of goods and services. On the contrary, macroeconomics looks at the behavior of the economy in general. It does not concentrate on particular companies and industries. Macroeconomics looks at the factors that affect the economy. On the other hand, microeconomics focuses on how a particular company can maximize profits while experiencing low costs. It deals with how firms can maximize their profits. Microeconomics aims to analyze market mechanisms to establish the price of goods in an economy with scarce resources. It deals with market failure, where the market does not produce satisfactory results. Microeconomics describes the theoretical conditions that are necessary for a perfect market competition (Mankiw, 2012). In this, case the demand increases when the prices of the commodity goes down. Legalizing marijuana will impose taxes on the product and prices will go up. The prices of marijuana will increase, it will affect the demand of the product will fall. Supply of marijuana at this moment will...
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