Economics for Business

Introduction4

Task 1. To Understand the Environment of Micro Economic Business5

1.1 Importance of the Micro-Economic Environment to Business Organizations5

Micro Economics5

Macro Economics5

Supply and Demand5

Total, Average and Marginal Revenue6

Factors of Production7

Limited Resources7

Price Determination8

Changes in Market Price8

Quantity Supply and Demand9

1.2 Business Objectives and Business Behavior9

1.3 Market Structures and Business Organizations9

Task 2. To Understand the Macro-Economic Environment In The Domestic Context10

2.1 Determinants of National Economy10

Stock of Resources11

Technology11

Government12

2.2 Impact of Government Policies on the Economy12

Fiscal Policy12

Monetary Policy13

2.3 Business and Macro Economic Environment13

Growth Prospects of the Economy14

Unemployment14

Task 3. To understand the implications of operating in the international economic environment on business organizations15

3.1 International Economic Environment and Its Features15

Regional Trade Associations15

Two Key Stakeholders in International Trade15

International Economics16

3.2 Economic Implications for Business Operating At Global Level16

Exchange Rate17

Economic System17

Conclusion19

References20

Economics for Business

Introduction

Economics is the social science which deals with the allocation of the resources at a level that they provide maximum benefit to the society. Understanding the economics and getting the better idea of how economics concepts can serve the business is very imperative study. Businesses can do rather well if they inculcate and analyze the economics factors of mirco economics for understanding their own business and they can also so well if they understand and look at the macro economic factors as they will work long way to make sure that they are getting the broader perspective of the economy.

Task 1. To Understand the Environment of Micro Economic Business

1.1 Importance of the Micro-Economic Environment to Business Organizations

Micro Economics

Microeconomics is the study of the economic decision that is made by a certain individual, certain industry, or certain households. In microeconomics, the idea is to discuss about how one unit of the economy can maximize its satisfaction (utility). It talks about a single business and industry and discusses about how income, revenue and production function of a single business (Porter, 2000, p.14).

Macro Economics

Macro economics is the study of studying national income, production and consumption. It discusses how a certain nation or whole economy can utilize its resources in a better manner (O'hara & Oldfield, 2006, p.376). It talks about aggregate demand and thus takes a broader perspective of the economy.

Supply and Demand

Supply and demand is one the more basic topics that is being discussed in the economics. At micro economic level, it discusses about the demand or supply of certain commodity or service at a particular price level. When talking about the macroeconomic level, demand and supply is discussed in aggregate manner and whole economies demand and supply is discussed under Aggregate Demand and Supply (O'hara & Oldfield, 2006, p.376).

Total, Average and Marginal Revenue

Revenue is simply the product of price and Quantity Demand when we are talking about economics. Total Revenue is the product of “total Revenue” and “total revenue”. While on the other hand, average revenue is simply the product of average production and “average price”. Marginal Revenue is revenue that is gained when each additional unit of the product is sold (Reichheld, 2006, p.73). The table below gives the better idea about how total, average and ...