Applying Microeconomics Theory in Business Environment

This report discusses the concept of business environment and how microeconomics theory can be applied to improve productivity and maximize community welfare. It covers the impact of microeconomics theory on decisions related to employment, efficiency, and availability of goods and services. The report also discusses the two basic points of applying microeconomics theory in practice, namely market structure and demand and supply. Examples from the article are also provided. Course code, course name, and college/university are not mentioned.

BMP4003 1

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
1. Applying the theory of microeconomics, and state its major affect...................................1
2. It have two basic points at the time of applying the theory into practise...........................2
3. Give statement of examples in the article:.........................................................................4
CONCLUSION................................................................................................................................4
REFERENCES ...............................................................................................................................6

INTRODUCTION
The report discuss about the concept of business environment it can be defined as the
collection of all internal and external components which creates an impact on the projected
activity of the organization. The factors involve competitors, purchasers, government,
distributors, legal, political, technological, social and economic factors. This concept is mainly
useful for the company to examine the future risk and chances. It also assist in approaching the
profitable funds, planning and confirming complete performance of the organization(Yan and
et.al., 2020). The report is created on the basis of goods trampoline expenses “ It would increase
on the expenses of shipping” that it bounds the multiple challenges originate after the
maximisation in the expense of transportation and port crowding.
TASK
1. Applying the theory of microeconomics, and state its major affect.
The theory of microeconomics illuminates how elements may be utilized and it consider
into the conception of multiple values, how peoples and firms can earn from the production of
exchange and production , and how peoples can productively collaborate and organize. Theory
of microeconomics mainly assists in the development of the economic policies that improve the
productivity at the time of maximising the community welfare.
The study of microeconomics describe how the purpose of capitalistic economy
permitted single unit to make its self-owned selection. It is the type of study which determine
that how individuals, households and businesses create decisions and find scarce funds. In this
case study it explain the prices of trampoline increases for 50 % because of shortage of container
and the demand of the trampoline decreases and increase the prices of china products. It is the
mostly used goods and services in the place of market. It basically used to enquiry the multiple
concepts of economic like demand and supply, scarce of resources, expense and advantages
along with the incentives it can assist and describe the multiple of human decisions(Sharma and
Singh 2022). The concept of microeconomics create an impact on many decisions which are to
be discussed below:
 Decisions of employment: Business is a separate legal entity they hire labour, and
provide them a salary which is very important and its create an impact on demand. The
overall sum of the firm's payments is wages to their workers, It provide perks on a
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vacation time, professional growth and multiple parts of insurance. The firm mainly
identify how much labour hours is significant to be requested in context to pay a
particular salary. It will help the company to increase the efficiency of employee if
company provide them a perks and some benefits it encourage the people to manufacture
more trampoline with less container.
 Efficient decisions: Efficiency can be define as the production of an element or service
in which time is exhausted; it indicates that the various of widgets manufactured and
produced in a labour hour, firm need to take better or productive decisions to create more
trampoline otherwise, company product demand will always be decreases at a higher
rate . So, company need to provide some benefit to the employees and encourage them to
work more in high labour hours. For example. In a given present technique, efficiency
may also be featured as a purpose of the comparison that lie among the input and output.
It also shows that the companies would fix efficiency at the above degree of possible
economic productivity, in which one element or goods manufacturing can't be better
without declining the manufacturing of another products and services(Song and Wang
2018).
 Availability of goods and services: The consumer will power to spend goods and services
create an impact on the type of products and services distributed by the organization. If
the price of the goods and services have rise, then companies transferred their
manufacturing to that good or service, sometimes it rejecting low profitable products and
services. Company always need to focus on their production because if suddenly the
demand of trampoline increase then they require more goods to sell in the market it also
reduces the shortage of availability of trampoline goods. All the other things are constant,
the microeconomics elements would recommend that if the level of price of a service or
better increases, companies maximise the supply of that commodity or service at the time
of reducing the supply of another products.
2. It have two basic points at the time of applying the theory into practise.
 Market structure: The term is mainly used in economics to explain how companies may
be categorized and difference related on the classify and kinds of products and elements it
serve, along with that how external variables and cases affect its projected activity. The
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characteristics of diversified markets in economic field are getting easier to hold as result
of structural market. Perfect competition, monopolistic competition, monopoly and
oligopoly are few of the systems of market and it may be categorized at below:
◦ Perfect competition: In the competitive market there are huge numbers of buyers and
sellers. All the sellers in the place of market are short firm proprietors compete in the
similar business. In this economy there are no big vendors(Alnori and Alqahtani
2019). So, it doesn't affect the competitive market. The result of this economy is all
the companies are price takers. Multiple estimations are created, like same elements
that are detected to be similar, all commercial projects have a single objective of
gaining money, and maximisation of profit is the only purpose. This type of firms,
there are no problems to admit or exploit, and the fields of market are open for
everyone.
◦ Monopolistic competition: It can be described as a high practical scene it actually
consider in the real world. In such circumstances the participation and conditions,
there is big number of purchaser and vendors. The goods are analysed to be similar
but all vendors seem to supply slowly in dissimilar products and services(Zhang and
et.al., 2018). Customers in such type of circumstances have a great choice to select
over the another goods. The vendors are capable to charge normally at a bigger rates
and it might even use few control in the market also.
◦ Monopoly: In this point there is only one seller in the market and it have a full control
over the price of the goods an services and whole market. Because of the monopoly
over the price of the product customers don't have any other option to purchase goods
from other seller. In this market there is no competition over the and it comes into the
less danger if one firm has full power to change the price of the product. This is very
beneficial for the seller but bigger disadvantage for the customer because they are not
capable to bargain for the rates.
 Demand and supply: It can be described that the goods demand is identified by the
pricing plan chosen for that good, and it can also displayed that the demand of toy
products may increase, then the prices of trampoline will also increases. On the other
side, there are multiple more components that create an impact on the product demand.
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Along with the increasing goods expenditures, it might support to a drop in demand of
commodity in the upcoming future. It can bes seen that , the demand for an element
increases, then the price, which is connected to the suppliers supplying higher things for
its own market profit(Yu and et.al., 2021). It also happen due to the availability of
opportunity cost, it is easily approachable for the distributor to a bigger units that they
lead to sell. The law of demand and supply is a kind of economic model that explains the
comparison between the fund suppliers an consumers. The model helps in knowing the
connection among the pricing of goods and individuals wants to buy or sell in the market.
The price of the other products like, the increasing cost of transportation that mainly
create an impact on the demand of goods. Hence, it showing the result with maximising
the commodity expenses, elements demand may reduce in near future(Rofin and Mahanty
2020). Expense of developing trafficking at the port, the most similar reason for the
concept of supply, states that if the prices of goods increase, distributor will serve higher
products for its economic advantage.
3. Give statement of examples in the article:
In context of given article increment in the prices of trampoline will also rise the cost of
selling and distribution of the organization. Due to rise in the cost of transportation it will reduce
the profits of the enterprise. In this article the expense to purchase one container is £650 but after
the increment in prices of trampoline, the purchase price of the container is high to the £1800. in
the UK market the Chinese goods demand is maximise (Ivanov 2021). So, the company of create
goods in UK to compete against these kind of challenges. This rise in the prices of trampoline is
about 40-50% it create the deficiency of containers.
CONCLUSION
As it is concluded from the above report it clear that the models of economic like
macroeconomic that will provide knowing about how variation in the demand and supply assist
to analyse the future performance and business position in the place of market. These models
give their views about the working of demand and supply and the structure of market useful for
the organization. It provide better understanding and knowledge about the economics and in how
much ways it mainly helps to examine those areas in which company is dealing and get
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influenced in long run. It leads the firm in the procedure of decision making and in the areas and
factors which make an influence on the company of its smooth working and productive business
administration. It also helpful for the company of expressing where the firm is lacking and which
theory would serve the necessity in a best possible manner.
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REFERENCES
Books and Journals
Yan and et.al., 2020. Strategic dual-channel pricing games with e-retailer finance. European
Journal of Operational Research. 283(1), pp.138-151.
Sharma and Singh 2022. Blockchain Technology in the Agricultural Supply Chain: A Case
Study of India. In Handbook of Research on Cyber Law, Data Protection, and
Privacy. (pp. 87-104). IGI Global.
Song and Wang 2018. Market competition, green technology progress and comparative
advantages in China. Management Decision. 56(1), pp.188-203.
Alnori and Alqahtani 2019. Capital structure and speed of adjustment in non-financial firms:
Does sharia compliance matter? Evidence from Saudi Arabia. Emerging Markets
Review. 39, pp.50-67.
Zhang and et.al., 2018. Process of innovation knowledge increase in supply chain network from
the perspective of sustainable development. Industrial Management & Data
Systems. 118(4), pp.873-888.
Yu and et.al., 2021. Benefits of market information and professional advice in a vertical
agricultural supply chain: The role of government provision. International Journal of
Production Research. pp.1-15.
Rofin and Mahanty 2020. Impact of wholesale price discrimination by the manufacturer on the
profit of supply chain members. Management Decision.
Ivanov 2021. Supply chain viability and the COVID-19 pandemic: a conceptual and formal
generalisation of four major adaptation strategies. International Journal of Production
Research. 59(12). pp.3535-3552.
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