Principles of Micro-economics : Assignment
Added on 2020-10-22
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PRINCIPLES OFMICRO-ECONOMICS1
ContentsINTRODUCTION...........................................................................................................................3Introduction to company and its market structure identification............................................3Rationale behind chosen company being in the market structure based on its structure.......4Market Structure.....................................................................................................................6Demand and Supply...............................................................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................122
INTRODUCTIONMicroeconomicsrefers to a branch ofeconomicswhich deals with the study conductedon the behavioural characteristics offirmsand individuals in relation to decision making processtaking into consideration two facts that resources are scarce and human wants are unlimited.Micro economics is generally concerned with the optimum utilisation of resources througheffective allocation ofresourceswhich are scarce and also taking into account the interaction thattakes place between firms and the individuals (Albarran, A., 2016). The major goal of thisbranch of economics is to conduct analysis of themechanism of market so as to decide andestablishrelative pricesfor products and services and allocate the limited and scarce resourcesamidst the alternative and varying uses. Microeconomics reflects the conditions under the scopeof which free markets conduct desirable allocation of resources. It also takes into account themarket failures in those situations wherein market fails to deliver effective and efficientresults.Micro-economics is a concept which works and operates in total contrast tomacro-economics that is a branch of economics which involves “the sum total of economic activitiestaking into account the various issues related with inflation,growth andunemploymentas wellas the national policies which relate to such issues" (O'Hara, 2014). The principles ofmicroeconomics largely deal with the effects of policies related to economics such as fluctuatingtaxlevels related to micro-economic behaviour and thereby relating to the aforementionedaspects of any national economy. Majority of the modern macro economic concepts, theories andapproaches have been built onmicrofoundations which imply that they are based on certainbasic assumptions associated with micro-economic behaviour. This report is based upon TenagaNasional Berhad which is the only company that is indulged in supplying of electricity to thelocal households with in Malaysia. This entity is headquartered in Kuala Lampur This report willexplore the market structure of this enterprise along with the reasons behind this company beingin this market structure. Further this report will gain a look into the ways in which this enterprisestrives to achieve equilibrium in short run and long run.Introduction to company and its market structure identification Tenaga Nasional Berhad is the only electric utility enterprise present within PeninsularMalaysia and this organisation is also recognised as being the biggest public listed power supplycompany within Southeast Asia. Operating within electric power industry, this organisation3
feasibly and successfully employs over 35000 employees at present. Further this enterprise hadan overall operating income of RM 5.89 billion by the end of the year 2013. Also, the worth oftotal assets owned by company in 2013 was RM 99.03 billion and net income of entity was RM4.61 billion. Tenaga Nasional Berhad earned enormous revenue of RM 37.13 billion in the year2013. Looking upon the figures mentioned just before, it can be stated the scale of operations isnot small and the success of the enterprise reflects in its revenue and operating incomes.Tenaga Nasional Berhad enjoys monopoly within the industry owing to being the singlemost company which is functioning and operating within Malaysia dealing in this sector. Thisorganisation serves more than 8.4 million consumersthroughoutPeninsular Malaysiaand theeastern state ofSabahthroughSabah Electricity Sdn Bhd. Tenaga Nasional Berhad’s majoractivities are ascertained to begeneration,distribution as well as transmissionof electricity. Theother major processes and functions taking place within this company comprise of testing,repairing as well as maintenance of thepower plants, provision of engineering facilities,acquisition as well as construction facilities for power unites associated goods, assembly andproduction of very high voltage switch gears, trading, coal mining and many more. Thisorganisation has its operations spread across geographical locations such as Mauritius,Malaysia,India, Pakistan andIndonesia.Looking at the above mentioned information, it can be seen that company operates at avery large scale and provides products and services across various places spread across theglobe. Further this is the only electric company within Malaysia due to which it enjoyseconomies of scale. Being the only player within the industry, this company derives benefits outof the market structure in which it operates, that is, monopoly (Franklin-Johnson, Figge andCanning, 2016). Enjoying the monopoly position, this enterprise has built a large customer basewhich possesses least influence as well as the authority to carry out negotiations upon theproducts and services offered by organisation.Rationale behind chosen company being in the market structure based on its structurePresent company, Tenaga Nasional Berhad is one of the largest and only companies whoare engage in the process of supplying electricity to households in Malaysia. Company opted toremain only direct electricity supplier directly to Malaysian consumers as to run their activities ina monopoly business sector. Monopoly market provides basic feature to company that arementioned below in brief:4
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