Business Economics



Introduction3

Microeconomics3

Offers4

Demand4

Balance4

Micro Economic Factors5

Income Level5

Price Elasticity5

Supply and Demand5

Opportunity Cost6

Macroeconomics6

Inflation6

Devaluation7

Political Environment7

Economic Environment:7

Condition of Financing and Interest Rate7

Macroeconomics Indicators8

Gross Domestic Product8

Inflation Indices8

Balance of Payment8

Fiscal and Monetary Policy9

Conclusion9

Business Economics

Introduction

ABC Complete Kitchens, Inc. concerns about economic factors that may affect the plant's operations and legal considerations. In order to examine the economic factors, the company will have to examine the micro- and macro-economic factors that can directly or indirectly affect plant's operations. Economic considerations are needed to be looked before making any long term financial decision or any decision regarding the acquisition of the capital. Even some of the broader theories of labor market are studied in the context of the economics so study of economics is must before making any such decisions.

Microeconomics

Looking at the microscopic elements of the economy is termed as Microeconomics. It is one of the oldest subjects in the human history and its history is as old as the history of mankind. Microeconomics are the disciplines of economics which are responsible for describing and analyzing the economic performance of individual units capable of making decisions, mainly consumers, resource owners and commercial businesses on a free enterprise economy. The objective of microeconomic theory is to predict as accurately as possible such action, explaining that the result is a logical consequence of some assumptions based on previous observations (Feenstra, 2010).

Traders have diverse needs, whose satisfaction gets limited by the availability of factors of production (capital, labor and raw materials). Microeconomics aims to determine how these resources get allocated to meet the different needs, which can be essential (food, clothing, shelter) or sophisticated in nature aesthetic, spiritual or material. The most significant elements get used to describe Microeconomics:

Offers

It is how companies determine which and how many goods and services produced, and what combination of inputs.

Demand

It is the way that individuals and or families (households) determine their demand for goods and services.

Balance

It is how you relate market supply and demand. These are some of the basic areas of study of economics. Applied economics is welfare economics and public finance. Arguably Microeconomics is the basis of any analysis of the economy (Bade, 2013). For example, when analyzing the effect of a tax on the theory of public finance will have to determine what microeconomic model get used to explain how this tax affects supply, demand and prices, and therefore, how many a company can enter through the tax or how it will affect the supply of factors of production (Acs et al., 2009). Thus, an income tax can reduce labor supply and tax benefits may decrease investment demand. Similarly, the central thesis of welfare economics is on the basis of assumptions relating to the functioning of markets.

Micro Economic Factors

Income Level

The level of income that gets earned by individuals is the most significant thing. Most of the times, it is their income that defines their consumption so as a business it is imperative to keep an eye on the income level of the general ...