Economics is the study of the way people and societies use limited resources in decision making. While macroeconomics focuses on governmental policies and big-picture economic implications, microeconomics classes involve the study of resource decisions at individual and business levels. A microeconomics course has several common objectives that contribute to a student's learning in a business, finance or economics program.
A primary objective is to understand the basic concepts of microeconomics. Supply and demand, comparative advantage, market structures, elasticity of demand and equilibrium are among the central microeconomics concepts. Supply and demand relates to the relationship between availability and demand for goods and price implications. This foundational concept contributes to understanding price elasticity, or willingness of customers to stretch with price changes. Comparative advantage is the essence of economics. It relates to the basic approach people and companies take in weighing competing options to use money or resources.
Analyze Microeconomic Factors
Once students have a foundational knowledge of core concepts, an instructor typically wants them to apply their understanding to contemporary economics issues. In looking at supply and demand, for instance, an instructor might ask students to address, in class or assignments, the relationship between oil supply, market demand and price fluctuations. A case study that lays out alternative investment opportunities, costs, risks and revenue projection for a company, enables students to analyze the concept of comparative advantage.
Supply and Demand Application
Supply and demand typically gets an abundant amount of time during a typical microeconomics class. Once students understand the basics, a teacher will likely spend ample time depicting demand graphs and having students analyze the relative changes in supply, demand and pricing in particular situations. This particular subject is vital to business success, which makes it especially important for students. If you sell goods in high demand, you need to understand your ability to charge high prices. Similarly, you need to recognize the potential shift in demand if you raise or lower prices.
Understand Business Costs and Pricing
Another common objective in microeconomics is understanding the correlation between business costs, pricing and profit. If a business acquires goods at $10 and resells them for $15, it earns a $5 gross profit. Students need to understand that this reality doesn't guarantee bottom-line profit. You still have to cover your fixed costs and any irregular costs. Knowing the processes in costing, budgeting and price strategies are critical to operating a profitable business.
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