Concepts Of Microeconomics

1019 Words3 Pages
bulb-icon

Recommended: Principles of Microeconomics

Task 1
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

Show More
Related

  • Cocktail Party Economics Summary

    735 Words  | 2 Pages

    Let’s begin with the theory of Scarcity. The concept of demand is directly relatable to the scarcity of an item. Let’s look at Jackson Pollock’s work for example. If only 20 paintings were available created by Jackson Pollock, there would be a much greater demand than if you could purchase them easily at your local art gallery.

    Read More

  • The Rise of Fuel in Australia

    1204 Words  | 3 Pages

    In economics, particularly microeconomics, demand and supply are defined as, “an economic model of price determination in a market” (Ronald 2010). The price of petrol in Australia is rising, but the demand remains the same, due to the fact that fuel is a necessity. As price rises to higher levels, demand would continue to increase, even if the supply may fall. Singapore is identified as a primary supplier ...

    Read More

  • Macroeconomics: Supply And Demand

    1062 Words  | 3 Pages

    We the consumer would rather pay less for any product that is needed or want. Ultimately we are the reason for high prices as well as low prices. Prices of products do not always stay the same and more popular products have higher prices than less popular products. These fluctuations, high prices and low prices are from the idea of supply and demand. Supply and demand defines the effect that the availability of a particular product and the desire or demand for that product has on price. Generally, if there is a low supply and a high demand, the price will be high (Investopedia). To understand the idea of supply and demand, the understanding of supply and the understanding of demand must be defined. The Law of Supply states that at higher prices, producers are willing to offer more products for sale than at lower prices, also that the supply increases as prices increase and decreases as prices decrease (Curriculum Link). The Law of Demand states people will buy more of a product at a lower price than at a higher price, if nothing changes, at a lower price, more people can afford to buy more goods and more of an item more frequently, than they can at a higher price and that at lower prices, people tend to buy some goods as a substitute for others more expensive (Curriculum Link). In todays economics these ideas are seen frequently in everyday life. The laws of supply and demand are seen in many ways in the company Apple Inc. Each year Apple Inc unveils a long awaited mobile operating system and IPhone. We can also see many aspects of the law of supply and demand in Nike Inc’s Jordan Brand. Jordan Brand has released a number of...

    Read More

  • The Principles And Theories Of Microeconomics

    971 Words  | 2 Pages

    Seldom do individuals realize the significance of acquiring a proper understanding of economics as a whole, let alone any subfields that branch off of it. Every aspect of economics is relative to another within itself, much like the roots of a tree are relative to the leaves or fruit that it bears. Attempting to distinguish between micro and macroeconomics in terms of significance to the real world is unavailing. Having a formal comprehension of this science begins with the principles and theor...

    Read More

  • Economics: Demand and Quantity Demanded

    1410 Words  | 3 Pages

    The law of demand states that if everything remains constant (ceteris paribus) when the price is high the lower the quantity demanded. A demand curve displays quantity demanded as the independent variable (the x-axis) and the price as the dependent variable (the y-axis). http://www.netmba.com/econ/micro/demand/curve/

    Read More

  • Intel Corporation And The Effects Of Economics

    854 Words  | 2 Pages

    Economics is defined as is the social science that studies the production, distribution, and consumption of goods and services. It primarily deals with the exchange of value and that labor or human effort is the source of all value. The field may be divided in other ways, most commonly microeconomics vs. macroeconomics. Microeconomics examines the economic behavior of individual units, including businesses and households, and their interactions through markets, given scarcity and government regulation. Macroeconomics examines an economy as a whole "top down" with a view to understanding interactions between the broadest aggregates such as national income and output, employment and inflation and broad aggregates like total consumption and investment spending. Econometrics is the application of statistical techniques to measuring economic phenomena.

    Read More

  • Supply And Demand

    1824 Words  | 4 Pages

    In conclusion, generally speaking the Law of Supply states that when the selling price of an item rises there are more people willing to produce the item. Since a higher price means more profit for the producer and as the price rises more people will be willing to produce the item when they see that there is more money to be earned. Meanwhile the Law of Demand states that when the price of an item goes down, the demand for it will go up. When the price drops people who could not afford the item can now buy it, and people who are not willing to buy it before will now buy it at the lower price as well. Also, if the price of an item drops enough people will buy more of the product and even find alternative uses for the product.

    Read More

  • Operations Management Theory: Reconciling Capacity and Demand

    1656 Words  | 4 Pages

    "Capacity is the output that an operation (or single process) can deliver in a defined unit of time. Demand is the quantity of products and services that customers request from an operation or process at any point in time".

    Read More

  • Economy: The Law of Supply and Demand

    998 Words  | 2 Pages

    A single firm or company is a producer, all the producers in the market form and industry, and the people places and consumers that an Industry plans to sell their goods is the market. So supply is simply the amount of goods producers, or an industry is willing to sell at a specific prices in a specific time. Subsequently there is a law of supply that reflects a direct relationship between price and quantity supplied. All else being equal the quantity supplied of an item increases as the price of that item increases. Supply curve represents the relationship between the price of the item and the quantity supplied. The Quantity supplied in a market is just the amount that firms are willing to produce and sell now.

    Read More

  • Four Factors Affect The Demand Of Cars

    1000 Words  | 2 Pages

    When the price of raw material will go up or down, the production coats will rise or fall. Secondly, the price of substitute products also affect the supply curve. Because the relatived products are competitive relationship, when the price of one product goes up, another will goes down. It will affect suppy. Thirdly, production technology will affect the supply curve. When the level of technology is rising or falling , the production costs will go down or up. finally, the government policies will affect the supply curve. Positive policies will make the supply go up, conversely, it will go down. For example, the govenrment limit the amount of cars which people can buy, it will caused the supply curve down. In addition, the price of product in the future and the development of product company will also affect the supply

    Read More

  • Toyota Products, Services, and Prices

    1088 Words  | 3 Pages

    Types of goods will help us determine whether demand for cars is elastic or inelastic. If a good is considered to be a luxury rather than a necessity, the greater is the price elasticity of demand (McConnell & Brue, 2004). Cars can be deemed as necessary due to a need for transportation. Other types of cars can be classified as luxury. A person who needs to be able to get from one place to another will have the need for a car. An old vehicle may suffice. In such a scenario, buying a brand new car is more likely to be a luxury rather than a necessity. If car prices go up, people are more inclined to just keep driving their old vehicles. In essence, the cars already on the road would serve as substitutes for new cars. However, over a longer period of time, old cars tend to wear out and the elasticity of demand for vehicles is less.

    Read More

  • Market Price

    1137 Words  | 3 Pages

    At prices higher than the equilibrium price the quantity supplied will be greater than the quantity demanded and the excess supply would oblige sellers to lower their prices in order to dispose of their output. For example, if price is 40p supply would exceed demand by 110. This situation, illustrated in Figure 11.2, where supply exceeds demand and there is downward pressure on price is sometimes described as a buyers’ market.

    Read More

  • The bandwagon, Snob, and Veblen Effects

    1107 Words  | 3 Pages

    That is, it is sensitive to price change, and also to the quantity demanded. This means that if many people are consuming a good, the demand is greater than if less people are consuming the good. To further clarify, take the example of attending college. In an environment where most of an individual's peers are going to attend college, the individual will see college as the right thing to do, and also attend college to be like his peers. However, in an environment where most of an individual's peers are not going to attend college, the individual will have a decreased demand for college, and is unlikely to attend.

    Read More

  • Micro and Macro Economics

    569 Words  | 2 Pages

    Microeconomics is the study of an individual economy, or of the different segments within the larger economy, while macroeconomics is the study of aggregate economic behavior, or the economy as a whole(Madura 103). The main goal of macroeconomics is to determine the impact of consumer spending on total output, employment, and prices.

    Read More

  • Microeconomics Reflection

    1401 Words  | 3 Pages

    What is Microeconomics? This question was left unanswered when I initially enrolled in this course. Microeconomics is the social science that studies the implications of individual human actions, specifically about how those decisions affect the utilization and distribution of scarce resources. Microeconomics shows how and why different goods have different values, how individuals create more efficient or more productive decisions, and how individuals best coordinate and cooperate with one another. Microeconomics does not try to explain what should happen in a market, but instead only explains what to expect if certain conditions change. For instance, If the price of the new iPhone 8 is higher than the previous model will the consumer buy it? There are several elements that will play into getting an answer for this question, but gives you a general idea of what microeconomics entails.

    Read More

More about Concepts Of Microeconomics

Open Document