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Microeconomics is a social science and branch of economics that studies the behavior and decisions made by people and firms regarding the allocation of scarce resources as well as the interactions between these entities. In other words, microeconomics studies the impact of decisions and incentives on the distribution and utilization of resources. It determines the reasons because of which different goods, services and resources have different values. It also studies how individuals and firms cooperate, coordinate, conduct and benefit through efficient production and exchange of goods and services from each other.
Microeconomics, thus provides a much detailed understanding of economics than macroeconomics which deals with the impact of all economic activity on the overall economy. One of the primary goals of microeconomics is to analyze and determine the role of different market forces in establishing the relative prices of commodities, and allocating scarce resources for alternative uses. It determines the ideal free-market conditions that can lead to optimum resource allocation. Related to this, it also analyzes the reasons due to which markets may fail to deliver efficient results—a phenomenon known in economics as market failure. On a broader level, it studies how economic policies such as taxation affect different aspects of the economy, especially microeconomic behavior of individuals and firms.
There are several Theories of Microeconomics applied to understand different aspects of consumer and firm behavior. These include:
Consumer Demand Theory Homework Help: The consumer demand theory or simply the Demand Theory is one of the core economic theories which relates to the impact of consumer demand for goods and services on their market prices. It highlights the role played by the demand of such commodities in the determination of their price. According to this theory, demand is the quantity of commodities that consumers are willing to and can buy for a given price and period of time.
Consumer demand depends on two important factors—the utility of a commodity to satisfy consumer need or want; and the ability of the consumer to buy it. Demand is meaningless if the consumer does not have the ability to pay for something he needs or wants.
Therefore, in effect, real demand can only be determined when the consumer is ready to satisfy the need with financial resources. Consumer tastes and preference are other important factors that determine demand. To survive in a competitive market, businesses must understand and analyze demand as one of the most crucial variables for decision making.
Production Theory Homework Help: The Production Theory explains the economic aspects of production or converting raw materials into finished products. It explains the principles used by firms to determine the quantity of commodities to produce and the amount of labor, raw materials and resources to be used in production. The finished product here is called the output and all that go into the production are called the input.
The theory includes most of the fundamental economic principles such as the relationship between factor costs used in the production (rent, wages, etc.) and price of the commodity, and the quantity of output in relation to the quantity of output used. Decisions made by firms regarding their production activities are classified into three levels of complexity in an increasing order.
The first level or lowest complexity decisions are related to the method of producing a given quantity with a given type of equipment so that short-run costs can be minimized. In the second level, decisions are made about the quantity which is most profitable for the type of plant and equipment with the aim of maximizing short-run profitability. The third level decisions are the most complex and used to determine the size and type of plant and equipment which are most profitable in the long run.
Cost of Production Theory of Value Homework Help: According to this theory, the price of a commodity or condition is determined by the total cost of input (labor, resources, materials, etc.) and taxes incurred in its production. The cost of technology is also included in the input cost and can be viewed either as part of fixed capital (plant and equipment) or circulating capital (intermediate goods and services).
The mathematical model of the theory states that the total short-run cost of production is the sum of total fixed and variable costs. Here, fixed costs are those which are incurred regardless of the quantity produced (land, fixed capital, etc.) whereas variable costs depend on the quantity to be produced (labor, raw material, etc.).
Opportunity Cost: As a major theory of economics, opportunity cost explains the potential opportunity or benefits that an individual or business must forgo when they choose one alternative over the other. Given that such opportunities are unseen by definition, individuals or firms making the choice can easily overlook them and incur significant opportunity cost as a result. Therefore, it is important to understand and evaluate all available alternatives before making the decision to minimize the cost. This evaluation is made by considering and comparing the costs and benefits of each alternative. While choosing the wrong alternative often results in bottlenecks, the right alternative chosen through informed decision-making can lead to higher return on investment or profitability.
The theory is strongly associated with the concept of time constraint which says that one can only do so much at a one time and thus it is inevitable that they must let go of others while engaged in one. When one of the alternatives is chosen, it is implied that it is more beneficial or profitable than all the others. It is also important to understand here that opportunity cost is the difference between the benefits of the chosen and the next best alternative only, and it does not consider the remaining alternatives.
Price Theory: Born in the Chicago School of Economics, the price theory uses the concept of demand and supply to understand and predict microeconomic behavior of people and firms. The theory states that the price of a commodity is determined by the relationship between its demand and supply. It proposes that the point where the utility of a commodity demanded by the consumer meets the marginal costs incurred by the seller is the optimum prices for that commodity. Determining this point requires the study of competitive equilibrium within markets to provide hypotheses that can be tested and rejected.
It must be noted here that the demand for the commodity may be affected by similar products from competitors; the perceived value of the commodity; and the ability of consumers to buy it. On the other hand, the supply may be affected by the availability of resources and raw materials. The theory also focuses on analyzing how market agents respond to changes in the prices of a commodity. However, the framework can also be applied to several issues of socioeconomic importance which do not directly involve price, for example; marriage, addiction, criminal justice, and law.
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In order to appreciate Managerial economics assignment help, we should first get our concept of managerial economics clear. What exactly is managerial economics? There are a number of definitions of managerial economics, lets look at a couple of them. According to Wikipedia, managerial economics bridges economics theory and practice, drawing heavily from qualtitative techniques like regression analysis, correlation and calculus. It further defines managerial economics as the application of economic concepts and analysis to help in rational managerial decisions.
There is one more definition of managerial economics which defines it as "is the science of directing scarce resources to manage cost effectively. It consists of three branches: competitive markets, market power, and imperfect markets. A market consists of buyers and sellers that communicate with each other for voluntary exchange. Whether a market is local or global, the same managerial economics apply."
Now that we have the fundamentals clear, we can now dive into the more intricate components of managerial economics. All you need to do is to email us your economics homework details to email@example.com. We generally respond to all our emails in less than 10 minutes. If you need instance help with your managerial economics homework, chat with our customer success team on our website - we are available 24x7, including weekends and holidays.
Macroeconomics, on the other hand, studies the entire economy of a country. It deals with entire economies and studies concepts like GDP (Gross Domestic Product) and the impact of national income, rate of growth, price levels and unemployment on GDP. John Maynard Keynes started the use of the term monetary aggregates and is credited with founding macroeconomics.
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