BMP4003 Business Environment: Microeconomic Theory and Toy Shop Case

This presentation provides an analysis of microeconomic theory through the lens of a toy shop owner grappling with rising trampoline prices due to increased shipping costs, exacerbated by port congestion and haulage price hikes. It delves into microeconomic principles, including market structures (perfect competition, monopoly, oligopoly, and monopolistic competition) and cost of production (fixed, variable, marginal, and average costs). The presentation applies these theories to explain how the pandemic and Brexit have led to increased material and shipping costs, ultimately affecting the final price for consumers. The case study illustrates the real-world impact of macroeconomic events on individual market units and their production costs. Desklib provides this and many other solved assignments for students.

BMP4003 Business Environment
Assessment 1 - Individual
Presentation

Contents
 Introduction
 BBC Article
 Microeconomic theory
 Market Structure
 Cost of production
 Application of theory
 Conclusion
 References

Introduction
 Micro-economics is considered as that part of
economics which discuss about the individual
form of business. The aim of this concept is
connect through the small form of business and
its different type structure which is used to
manage its everyday operations. It generally
connected with the identification of prices which
are distributed by retailers to the consumers,
along with this cost of all the materials which
are used in production activity

BBC Article
 This case study is about a owner of
toy shop, who is experiencing a
problem which is concerned with the
rise in the price of trampoline due to
the increase in the shipping prices. It
also shows the overcrowding of ships
at port which give hauliers an
opportunity to increase their cost of
haul for the containers.

Microeconomic Theory
 According to the theory of micro economics, it has been assumed that there are numerous of
buyers and sellers are available in the market and they do not affect the working of each
other. But this theory is not reliable in the actual life, as there are some business holders who
can control the market according to their choice. Apart from all these discussion, different
types of theories have been mentioned to elaborate more about the concept of micro
economics. These theories are-
 Market Structure
 Cost of capital

Market Structure
 Pure or perfect competition
 Monopoly
 Oligopoly
 Monopolistic

Cost of production
 Fixed cost
 Variable cost
 Marginal cost
 Average cost

Application of theory
 Hike in the price of trampoline is result of rise
of shipping prices due to the pandemic situation
as there are various changes has been
experienced by the company after this. The cost
of material which is used to make the trampoline
is also increase which automatically affect the
price which will be offered to the customers.

Summary
 From the above presentation, it has been seen that how an individual market unit
which is involved in the manufacturing of toys like trampoline. This case study
shows that with the impact of corona and Brexit there are several changes has
been observed by the companies. Increase in the shipping cost of the product is
one of them which also in the overall production cost of the firm.

References
 Brown, R., Liñares-Zegarra, J.M. and Wilson, J.O., 2018. What happens if the
rules change? The impact of brexit on the future strategic intentions of UK SMEs.
The Impact of Brexit on the Future Strategic Intentions of UK SMEs (March 1,
2018).
 Sharma, A. and Jhamb, D., 2020. Changing consumer behaviours towards online
shopping-an impact of Covid 19. Academy of Marketing Studies Journal, 24(3),
pp.1-10.

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