Microeconomics - Basic Core Concepts of Economics and Their Impact

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MICROECONOMICS
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The report will reflect the basic core concepts of economics and their impact on the
real-time job environment. I have analysed various concepts of economics that are used in the
business environment and are even applied by the business concerns for evaluating the
volatility of the business environment (Emas, 2015). In my opinion, the business entities can
implement various economic principles in their decision-making process that will help the
company to make an efficient decision by which profitable outcomes can be obtained.
Nowadays, it is evident that to sustain in the competitive market for a longer period and to
attain sustainable competitive advantage in the global market; business concerns need to
evaluate both the internal and external economic environment (Friedman, 2017). If I keep
myself in the shoes of a business economist, I will say that before taking any important
decision for the business whether related to any investment opportunity or any other decision
related to operational activities of the business, integrating all managerial economics decision
is essential for gaining profitable results (Froeb, McCann & Ward, 2015).
In my opinion, business analyst mainly used to two basic terms in all their research
studies related to economics, such as supply and demand. The amount of something available
in the market is the quantity of supply, and the amount of a product that individuals want is
the demand. In a market, various economic activities are operated, and mainly two parties are
involved in the market activities the purchasers and the sellers (Mankiw, 2020). Buyers in the
market will analyze the overall demand for a product at different prices. In contrast, sellers
will identify the overall supply of a product at various price levels. The business concerns
evaluate the aggregate demand and supply of the products and based on the market trend
situation; the business houses place their products in the competitive market. Generally,
market is defined as a place where many economic activities are carried on between
purchaser and seller by taking into consideration their behaviour and interaction with each
other (Helfat & Peteraf, 2015). When interaction between two parties is done in the market, it

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helps to evaluate the market price and accordingly, goods and services can be efficiently
delivered to the market. Usually, the price of the product is decided by keeping in mind what
is the demand of the particular product in the market that people are willing to pay and how
much cost will be incurred in production of the product. I have analysed that before deciding
the price of a product, every business economists must understand the basic concept of law of
demand that states the relationship between price and quantity demanded in the market thus
framing effective decision related to the production of goods and services (Wiedmann, &
Lenzen, 2018). The law of demand has a basic principle that when value of a product
increases the demand quantity for that particular product diminishes and vice versa. Thus, the
demand curve reflects a downward fall. The supply curve shows an upward rise as in this
case, the law state that when value of a product rises the supplied magnitude of the same
product will increase and vice versa. The basic economic principle related to supply and
demand states that the demand curve shows an inverse association between price and quantity
demand of a product.
In contrast, the supply curve reflects a positive association between price and supply
of a product. All business economists try to identify the equilibrium level of price in the
market by which they can make an efficient decision regarding the allocation of goods and
services in the market (Siudek & Zawojska, 2014). Various factors in the market influence
the buyers to demand such as price of the product, income of the buyer, taste and preferences
of the buyers, prices of related goods, and many more other factors related to economic
environment of the business. Similarly, certain factors are there that influences the seller
choice like price of a product, a technology used in the production process, input prices, and
expectation of people from the product.
In my viewpoint, all economists’ focuses on finding the equilibrium price for making
efficient decision-making related to a market environment. It is a well-known fact that when