Microeconomics is a term that is derived from mikros

Microeconomics is derived from the Greek word mikros, which means “thin.” In industry, it is used in small businesses and includes concepts, challenges, and resource allocation. The concepts and rules are founded on theories and propositions of how an economy works. As a result, it is concerned with the behavior of discrete units, such as a resource owner and a corporation. Furthermore, microeconomics is concerned with how people try to meet their needs and optimize their happiness from scarce capital. It is also known as the pricing theory because it seeks to calculate individual prices by analyzing demand and supply relationships. The microeconomic concepts determine the decisions made by a firm and households. The factors include market structures, the role of profits and prices in determining the allocation of resources, the elasticity of demand, diminishing returns and supply, marginal utility and demand, and elasticity of supply (Tyagi). The principles of microeconomics include scarcity, cost benefit, incentive, comparative advantage, and opportunity cost amongst others. The principles illustrate the considerations that are made by people in making decisions and gives the explanations for a particular decision.

Concepts of Macroeconomics

Concept

Food choices

Curt Flood

Market structure

Perfect competition where the firms have freedom of entry and exit thus they decide their own recipes.

This is an oligopoly market dominated by few dominant basketball teams. The entrance into the main league is difficult.

Role of profit and prices

The prices determine the choice of recipes, the quantity and cost per item.

The role of profit and prices is evident in the benefits of belonging to a particular team and the wages.

Elasticity of demand

This refers to the variations in demand for dishes such as the different cuts of tavern.

Refers to how much the player is wanted by other teams in the baseball league.

Diminishing Returns and supply

This would apply in changing the size of the cut and the effect on the prices.

This would be evident in changing from one winning league and changing team members.

Marginal utility and demand

They are the benefits they will gain by changing the outlook increasing items on menu thus rising sales.

The additional benefit he would obtain by moving to new team

Elasticity of supply

This determines the ability to make the commodities available for consumption.

This concept refers to the ability to get new players in the team and the simplicity of joining new team

Principles of Macroeconomics

Principle

Food choices

Curt Flood

Scarcity

The menu options are limited thus they need to use every part of a cow to create new items.

There are few teams that Flood would wish to join thus he chose to remain on the same team.

Cost benefits

The cost benefits would be the utilization of all parts of the cow to make new recipes to be sold at higher prices.

The cost benefits would be remaining in the same team and achieving more victory.

Incentive

The incentive in this case are the new market opportunity and the discovery of new recipes.

The incentive for flood would be the growth of the career.

Comparative advantage

The comparative advantage would be focus on all parts of the animal and make unique meals that are competitive.

The advantage would be focus on the career and increase skills to enable teams win leagues competitions.

Opportunity cost

The alternative forgone is the old meals and the decision to take new meals.

The opportunity cost for flood is choosing to sue the team and end his career and the alternative forgone is joining new team thereby promoting his career.

The case for food the company decided to increase the food recipe to help attract more customers and attain maximum use of the cow that they purchase. Further, they will gain a comparative advantage of the situation and gain benefits due to the opportunity cost they forego. On the other hand, Curt Flood made a decision to proceed with suing the baseball team and forego moving on to a new team. The alternative foregone resulted to benefits and recognition many years later (Barra).

The most difficult microeconomic concept is the opportunity cost that dictates the best alternative forgone by an individual or a firm. The concept illustrates the relationship between the scarcity and the choice made because there is an assumption that the resources are scarce and must be used efficiently. There are several aspects that people consider when deciding on something where they are presented with options to choose. The opportunity cost not only incorporates the actual cost of acquiring an item but also the economic benefit obtained usually called the utility (Miller). The aspects that contribute to a decision include the finances available, benefits tied to an option, the situation, suitability, availability of alternatives, cost-benefit implications and the future estimations of the outcomes of an alternative chosen.

My experience made me understand better the opportunity cost. I spend an enormous amount of time in the house, and I like entertainment. I decided to buy an entertainment device either a smart TV or a smart home theater audio system. However, I realized I had limited resource to acquire both items, and they cost almost same price thus I had to make a choice. Therefore, I decided to forego the smart home theater audio system, and I purchased the smart TV. The opportunity cost increased however because the TV is slightly expensive, but it has more benefits to me because I can listen to audio music, watch videos, and play games.

The greatest weakness or deficiency in the microeconomic approach and assumptions affects the decision on the opportunity cost. The concept of opportunity cost fails to associate the psychological aspect of buying and the economic status of the individuals. People from different economic classes exhibit differences in deciding the opportunity cost mainly due to their financial power, the difference in tastes and preferences, the previous experiences, and rate of economic growth. It would be appropriate to understand the aspects in a personality that contribute to the decision on opportunity cost (Miller). The assumptions, in this case, are that people behave in a similar manner, there is a perfect market, and the market is stable.

My economic thinking has been increased and improved through the study of microeconomics, therefore, I can make better decisions while acquiring products and services. The study of opportunity cost has taught me that there always several alternative options, therefore, people must make decisions by choosing the most suitable thing and forego others. Further, the choice of an alternative must be based on the benefits obtained from purchasing the items. Moreover, throughout the course, I have been able to understand the benefits of making smart decisions and the importance of spending scarce resources well. There are limited resources that are available to people for spending in purchasing goods and services, therefore; they have to make most preferable choices depending on the situation, finances available and the purpose (Tyagi). Also, I was able to differentiate between the needs from the wants. Thus, I obtained knowledge on choosing preferences and organizing the list of priorities in life to avoid incurring unnecessary costs.

The information on the principles and concepts of microeconomics is very helpful, and I can apply it in very many incidences while making economic decisions and choices. The principles provide insight of how the factors in microeconomics interact and the reason why a market behaves in a particular manner (Tyagi). The theories help in associating all the cost incurred to some outcome to gain maximum benefits thereby reducing wastage of scarce resources. Moreover, all the decisions made must be well structured, and actions must be planned according to levels of priority. The choice of preferences has to be organized and a list of options made from which the best alternative is selected. A cost benefit must support all the spending made by an individual, and there must be an incentive behind it. Lastly, I should focus on those actions for which the opportunity cost is lowest during expansion to reap the most benefits. The primary outcomes from the study are improved decision making and a better understanding of microeconomic principles that affect me and the choices I make.

Conclusion

Individuals have a scarcity of resources thus they must create a list of their requirements. All the decisions made must be supported by a cost-benefit. There are choices from which people must decide the most suitable alternatives. We should focus on undertaking those activities that have low opportunity costs. The supply and demand of result in shifts in prices and availability of commodities in the market. People spend on goods and services because they obtain some benefits from them.

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Works Cited

Barra, Allen. ”How Curt Flood Changed Baseball And Killed His Career In The Process”. The Atlantic. N.p., 2017. Web. 8 Mar. 2017.

Miller, James D. ”Teaching Innovation In Principles Of Microeconomics Classes”. SSRN Electronic Journal n. pag. Web.

Tyagi, Kalpana. ”Chapter 2 Principles Of Microeconomics Part-1”. SSRN Electronic Journal n. pag. Web.