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Analytical tools in making decisions concerning increasing commodity price - Essay Example

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Economics is the study of manufacture, distribution and the consumption of goods in a market structure. Economics is a social science that revolves around people’s life starting when they are born till when one dies…
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Analytical tools in making decisions concerning increasing commodity price
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Download file to see previous pages The government is the referee in making sure that there is fairness in the business. Economics being a social science it revolves the behavioral aspect of the human life which is imposed by the scarcity of resources in a person life. In a market the interaction between the sellers result what is called economic equilibrium which results the issue of competitiveness in the market. The term economics is a broad discipline that consists of microeconomics and macroeconomics. Microeconomics Microeconomics is a branch of economics that mainly deals with the decision that the agents of the market make while conducting business. The agents of the market are the people and businesses. In essence the study of microeconomics deals with basics of the market. It is more of specific than general. Microeconomics tries to bring the relevance of the small agents in the market that could be neglected but are very important in the study of economics. The consumers provide the market while the suppliers and the businesses provide with the goods and services. The major dwelling of microeconomics is in the supply and demand forces that operate in the market. The supply forces refers to the availability of goods and services to the market while the demand refers to the availability of customers of various products and services in the market. These forces are crucial in the determination of the price of various commodities in the market. The higher the demand it would mean that the goods and services are in short supply while the lower the demand it means the goods and services are in high supply. Thus in high demand the prices are in sky rocketing while in low demand the price are very low than normal (Zhang, 2005) Macroeconomics This is a branch of economics that mainly the whole industry in the market rather than a specific entity like a company. It tries to look an economy at a wide view e.g. the general economy of the country. In macroeconomics, issues such as the GDP are keenly followed and how they are affected by factors such as price levels, unemployment and the rate of growth. The two terms lead to a better understanding of economics. There could be some differences between them but they still deal with study of production, distribution and consumption of goods. In our module we have greatly dealt with microeconomics which entails eh study of the behavioral aspects and factors affecting the agents of economy. There are various theories that try to explain the term economics. These are the supply and demand theory and the classical theory. The supply and demand theory of economics mainly entails looking at the two forces in the market that entirely explains the relationship between the buyers and sellers. The other theory is the classical theory which entirely concentrates on the equilibrium in the market which operates in the market when the market is not interrupted. The theory mainly stresses on the factor that the market should operate freely without any interference (Adams, 2008). Analytical tools in making decisions concerning increasing commodity price The price of any product affects the sales of any company, which exponentially affects the profits acquired by the company. In any decision making process of any profitable company coming up with price rise is usually a tricky situation as it directly touches on the customers’ feelings. At the price level is where the company directly interacts with the customers. Price increase cannot be done overnight but it is usually as a result of many factors that contribute to this course. It is mainly as a result of ...Download file to see next pages Read More
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