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The Peculiarities of Microeconomics - Assignment Example

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This assignment describes the main peculiarities of microeconomics. This paper analyses term microeconomics, monopoly, Elasticity, utility, and works cited…
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The Peculiarities of Microeconomics
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Download file to see previous pages While macroeconomics deals with the topic on a broader aspect, microeconomics has narrowed down its concentration to some specific areas of economics like the allocation of resources by firms, consumers or households which can affect the prices of the goods due to the variations in supply and demand. Investopedia describes the importance of microeconomics for entrepreneurs:
“Microeconomics looks at the smaller picture and focuses more on basic theories of supply and demand and how individual businesses decide how much of something to produce and how much to charge for it. People who have any desire to start their own business or who want to learn the rationale behind the pricing of particular products and services would be more interested in this area”( “Microeconomics”, Investopedia.com, 2009)
Microeconomics then is helpful to people starting up small and medium-sized business since prices matter when computing costs and determining cost drivers in the operations of an enterprise. Price is an important factor in determining costs; thus, microeconomics role :
“The general concern of microeconomics is the efficient allocation of scarce resources between alternative uses but more specifically it involves the determination of price through the optimizing behavior of economic agents, with consumers maximizing utility and firms maximizing profit” (Moffat, 2009).
It is established that when a commodity becomes scarce, the market demand is increased which leads to a price increase. Conversely, if the supply increases, the price hike would not be taking place. The changes in price severely affect the organizations which produce the goods or offer services especially for products that are inelastic. This leads to a price hike that consumers immediately experience such as the fluctuating price of oil in the world market. ...Download file to see next pagesRead More
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