Are you looking for an explanation of microeconomic analysis? Read this page to learn the macroeconomics definition and fundamental principles. You’ll also figure out the difference between microeconomics and macroeconomics.
🔝 Top-5 Examples of Microeconomic Analysis
- Aviation Strategies Analysis of Boeing and Airbus
- Apple Company's Poor Inventory Management Issues
- Walmart Corporation's Strategic Planning
- The United Arab Emirates Economic: Theories and Trends
- Latin America Economic Growth
🔤 Microeconomics Definition
Learning about the essence of microeconomic analysis is the first step to conducting it successfully. Therefore, let’s look at some definitions related to it.
What Is Microeconomics Analysis?
A microeconomic analysis is an assessment of how the actions of individuals and companies affect the economy. In particular, this study examines how people make purchase decisions based on their incomes and product prices. It also looks into how companies determine their production levels and choose pricing strategies.
What Is the Difference between Microeconomics and Macroeconomics?
Macroeconomics differs from microeconomics in the scope of its analysis of the economy. The former looks at the economy from a general perspective. In particular, it studies the entire industries and the nation’s economy as a whole. In contrast, microeconomics focuses on smaller economic entities, such as people and individual companies.
🆚 Microeconomics vs Macroeconomics
Let’s draw a more detailed comparison between microeconomics vs. macroeconomics. Knowing these differences will help you determine how to approach your analysis and write a good report.
📑 Principles of Microeconomics
To further assist you with your analysis, we have prepared a breakdown of the 7 main principles of microeconomics.
Demand and Supply
The concept of demand and supply is one of the fundamental principles of economic theory. It is quite simple to understand. When suppliers see that the demand for a product has exceeded the supply, they either produce more goods or increase prices. Conversely, when the supply exceeds the demand, the supplier can either cut down on the supply to meet the demand or charge less for their products. When prices are lower, the demand increases and meets the supply, stabilizing the market.
Law of Diminishing Marginal Utility
This concept of microeconomics is beneficial when trying to maximize consumer utility. This law states that the product demand declines with each consecutive unit an individual consumes. For example, a customer can eat three ice creams in a row, but their craving for ice cream will decrease with each subsequent serving. After the third one, the consumer no longer wants it and will stop buying. This law plays a significant role in analyzing customers’ purchasing decisions.
Veblen Goods
Veblen goods are products that symbolize status or luxury. Customers do not mind paying much for such goods, allowing suppliers to gain a high profit. The main feature of these products is that their demand increases as the price soars. In other words, the more expensive the product, the more customers want it. Examples include gems, jewelry, fine wines, and yachts.
Giffen Goods
Giffen goods are similar to Veblen goods because an increase in their prices does not lower the demand. However, the nature of these products is different: these are essential goods that are usually low-priced, for example, bread, wheat, and rice. The demand for these items rises when prices increase.
Opportunity Cost
The concept of opportunity cost is based on the assumption that an individual has limited resources but limitless, mutually exclusive choices. Therefore, when making a decision in favor of one option, a person has to give up the alternatives. These rejected alternatives, or the loss of one gain in favor of another, is called opportunity cost.
Scarcity
Scarcity is a fundamental concept in advanced economic theory. It posits that we live in a world with limited resources but have unlimited wants. Therefore, we have to address this problem by deciding how to allocate scarce resources effectively.
Elasticity
Elasticity describes how one economic variable responds to changes in another one. For example, price elasticity explains how consumers’ demand changes in response to variations in prices or incomes. Another example is cross elasticity: it describes shifts in demand for one product when the cost of another product changes.
🏆 Best Microeconomic Analysis Research Titles
- Macroeconomic Measurement ImportanceBusiness essay sample: Macro-economic growth measurement is of great significance to a nation because it helps in establishing the potential of an economy.
- The Economy of the United States: Micro and MacroeconomicsBusiness essay sample: The given work is aimed to describe the economy of the USA, considering different factors of micro and macroenvironment.
- Microeconomics: Demand and Supply in CurvesBusiness essay sample: This report answers the questions related to microeconomics subjects, such as demand, supply, by illustrating these concepts on curves.
- Microeconomics Principles: Global Oil ConsumptionBusiness essay sample: Global oil consumption has been increasing steadily over the years, consequently, there has been increasing demand for this vital but yet scarce commodity globally.
- US Automobile Industry's Economic ProfileBusiness essay sample: There are shifts in demand and supply of the auto industry US currently and the exogenous reasons which affect this shift are stated.
- Microeconomic Theory for Analyzing an ArticleBusiness essay sample: This essay is a review of the article regarding the new strategy that Microsoft has employed to reduce the prices of its products.
- The Microeconomical Changes and Processes in AustraliaBusiness essay sample: Australia is one of the countries where the overall cost of life of people is on a high level. People are satisfied with their lives and the housing conditions offered for them.
- Olympics and Its Economic ImpactBusiness essay sample: The modern Olympics games began in 1896 in Athens. Olympics are held every four years and it has a positive impact on the economy of the host country and has positive spillovers.
- Business Environment and OrganisationBusiness essay sample: Business environment basically means the surrounding factors and influences that affect trade. It can be categorized into two; internal and external.
- Managerial Economics Importance for Running a Strong CompanyBusiness essay sample: Managerial economics refers is the sub-discipline of economics that uses concepts of microeconomics techniques in the decision-making modules used by business managers.
- Business Analysis of Almarai and Savola GroupBusiness essay sample: Almarai Company is a business in Saudi Arabia with the biggest integrated business in the Middle East. The business was based on a venture agreement between two family.
- Unemployment Issues in the Arab CountriesBusiness essay sample: For Arab countries of the Middle East, the problem of unemployment occurred to be one of the most significant challenges of the latest decade.
- Global Financial Crisis Effect on the Saudi MarketBusiness essay sample: This dissertation aims to examine the effects of the global financial crisis on the Saudi market and to find out the solution to save the economy from this credit crunch.
- Business and Economics: Service TransformationBusiness essay sample: The paper describes the various aspects of service transformation and explains the impact it is likely to deliver within the participating industries and its effects on the economy.
- Economic and Psychological Incentive MechanismsBusiness essay sample: The purpose of the work is to analyze the problem and suggest what economic and psychological incentives may be applied to change customers’ motives and behavior
- Invesco Ltd: Influence of COVID-19 Pandemic and the New Product IntroductionBusiness essay sample: The COVID-19 pandemic harmed the global investment market, resulting in significant losses for Invesco at the beginning of the lockdown.