Concepts Of Microeconomics

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Microeconomics
Microeconomics can be defined as a social science that studies behaviour regarding individual, households, firms, governments along with nations to make a decision and choices in allocating limited resources to satisfy the unlimited wants. Microeconomics will be refers to the basic, which is small economics unit and concentrates much more on individual market. Simple say it can be study in making decision since we have limited resources such as assets as well as funds. On other hand, business and industry have allocating limited resources and the supply and demand of goods and services throughout market economies.
Law of demand
Demand is the amount of particular economic between the quantity of good and service for consumers …show more content…

Therefore, substitution effect is relative to the price change and to controlling for the change in real income and it is stronger than the income effect. For instant, when the price of burger goes up, consumers will most likely eat burger and more ham, since the change in relative prices. While income effect is changes in price that can affect consumer purchasing decisions when purchases more than two goods (sparknotes.com). Example, when the price of burger goes up, consumer will feel relatively poorer, so consumer tendency might be buy fewer of both burger and …show more content…

Demand is something that we want, are able and plan to buy it. It reflects a decision about unlimited wants to satisfy. While when the price goes up, demand will goes down. However, supply is resources and technology that determine what it is possible to produce. Supply reflects a decision about which technologically feasible items to change. Moreover, when the price goes up, supply remaining the same. It meaning that the higher the price of good, the greater the quantity supplied.
On October 2, 2014 government increased the petrol and diesel price by 20sen per litre in keeping with subsidy rationalisation plan (Thestar.com.my, 2014). While the new retail price of RON95 will be RM2.30 and diesel price will be RM2.20 per litre. Therefore, this issue make many consumers feel dissatisfy because it will affect the economy and people. The purpose of increased the price of fuel is to ensure that the country’s finances will remain strong (Thestar.com.my, 2014). Through RON97 can be a substitute for RON95, the demand for RON97 will have minor changes as the price of RON97 is higher than RON95. Consumers could not afford to use RON97 as a substitute to

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