Business Economics Analysis: Micro, Macro, and Market Structures

This essay provides a detailed analysis of business economics, exploring the relationship between economics and the business environment, encompassing both micro and macro perspectives. It delves into fundamental economic problems, firm behavior, and various economic systems such as laiss...Read More

BUSINESS ECONOMICS

Contents
INTRODUCTION.........................................................................................................................3
MAIN BODY..................................................................................................................................3
Economics and Business economics...........................................................................................3
Relationship between economics and business environment (micro and macro).......................3
Thinking as economist.................................................................................................................4
Fundamental economic problem and firm behavior....................................................................4
Economic System........................................................................................................................5
Demand and Its Factors...............................................................................................................5
Change in demand and change in quantity demand....................................................................5
Supply and its factor including Equilibrium Price and elasticity of demand..............................7
Market structure and types of imperfect competition..................................................................7
Consumer behavior and firm production decisions.....................................................................7
CONCLUSION..............................................................................................................................8
REFERENCES..............................................................................................................................9

INTRODUCTION
Economics is the social science which studies the behavior of people, interaction and
values of people towards production, consumption and distribution of goods and service. There
are two major types of economic which are micro economics which shows the demand and
supply of products that consumers and supply individually selling and consuming. On the other
hand, Macroeconomics shows the behavior of people and aggregate demand and aggregate
supply in market. This essay shows the business economics and business environment
relationship. Fundamental of economic problems and firms behavior. Further, economic system
like lessez fair capitalization and mixed system in country. How demand its factor affect quantity
demand, supply and its factor including equilibrium and price elasticity. However, market
structure and consumers behavior that changes firm’s production behavior.
MAIN BODY
Economics and Business economics
Economics is the social science work where behavior of consumers are shows for demand of
goods and services and supplies of goods and service in market. It shows the aggregate demand
and supply in country that leads to change witrh many factors like price, taxes and other. On the
other hand, business economics is the field of applied economics which studies financial,
organizational, market and environmental issues faced by various corporations (Izagirre-Olaizola
and et.al., 2020). The business economic impacted on the concept like scarcity, product,
consumption and distribution. The demand and supply of goods and service and the impact on
scarcity that affect the operation of company. There are two type of business economics
managerial economics and business economics for nonprofit organization. Managerial
economics that focus on the micro economic factors that influence the decision making of
consumers. This provide with either profits or loss with company by talking best outcomes from
strategies. Whereas, nonprofit organizations are working for different motive and optimal use of
resources.
Relationship between economics and business environment (micro and macro)
Micro economics shows the change in behavior of individual person due to price or may
be other factor. The change in demand for individual or small group of people are come under
micro economics where business decision are changes according to change in behviour of
individual. Here major foucs is on supply and demand affected from other factors. It considered
tax regukation and legislation of government. The price level in economy is determine by
demand and supply of goods and service. Basically this shows the human behavior towards
goods and service they are demanding, allocation of resources and decusion of business.
Macro environment studies behavior of whole country and in various manners polices
impact the whole economy. It analyze the country economy and industries rather than individual
or particular company and follows top down approach (Rao, 2021). Macroeconomics analyze

how increase or decrease in exports affect the national capital account of company, GDP of
country and unemployment rate had impacted. Macroeconomics focus on aggregate and
economic correlations which is helped by government agencies that formulate country fiscal
policies.
Thinking as economist
There are certain economist which stated there statements through various articles and
books which are publish by them. According to Mendy and Hack-Polay (2018), economic is the
principle which shows behavior of consumers towards good and service available in market. Tis
behavior are changing according to change in price and other factors like tax or technology.
Consumers demand are very dynamic which and wants high quality products at low prices.
Suppliers of goods and service help consumers to attain their satisfaction level by consuming
goods. The suppliers make available to products which help them to earn goods profits from
selling products. But Larisa, Galina and Stanislav (2018), argued that, these demand re affected
due to change in market environment factors where government are also included. The business
are affected due to market condition of country i.e. Inflation and deflation in country will affect
the whole chain of suppliers and demand for products in market. The microeconomic will be
affected if there is any change in Macroeconomics. This will directly affect the whole country
purchasing and investment power of consumers and suppliers respectively. However, it can be
said that business economic are in related to each other as they both are affected if any one of
them is changed.
Fundamental economic problem and firm behavior
The fundamental problems is what to produce? It shows that firms find difficult to decide
what type of produce to produce for market. This van be analyze through market demand of
consumers which are highly demanded in market. Suppliers are confused as there are variety of
goods available to consumers and already provided by competitor. Consumers must select the
products which are unlimited in numbers and resources are available easily to suppliers.
Second approach is How to produce? Here suppliers find difficulties as resources are not
easily available under the cost they want are available in market. This change the consumers will
increase the price and leads to less demanded in market (Stumpf and Sommer, 2019).
Technology is also considered by firms which can reduce cost and time to produce goods and
make available in market. Hence, alternative methods for producing are also available for goods
which help firms to maintain the flow of goods.
Last problems which is faced by companies is whom to produce? Once what and how
find by firms, goods is are then produce. Firm will now decide to whom this product will be sold,
how the national product is being distributed among the members of society. Target consumers
for goods are identified by firm to sell goods in market where these consumers are available and
looking of this type of products.

Economic System
The Economic system is the system which include the production, distribution of goods
and service and resources allocation within a geographical area. It include various combination
of agencies, institutes, entities and decision making and consumption of goods that build an
economic structure. Here various authors are different models which various strategies economy
need to follow for development. These models are:
1. Laissez-fair capitalism: this theory is developed in 18th century in opposed any
government intervention in business affairs within country. This theory shows that
government intervention should be minimum in business decision for the better
development of business in country (Powell and ed., 2019). The philosophy shows that
there should be free market capitalism in country and less involvement of government.
Involvement of government. I country makes efficiency of and high regulations are
implied to follow rules which makes company restricted to work in economy. However it
is irrelevant model for development as government intervention must be there for better
development and avoid inequality in country.
2. Mixed system: This theory is system that shows the both aspect of both capitalization and
socialism. The mixed economic system protect companies of private property allow
economic freedom in the use of capital. But also allow interface government in company
and economy in order to achieve social aims. This theory make high efficiency of in free
market that promote equality, and rational market participant and avoid partiality. Here
most of production ae under the private organization which is run under government
regulation. Historical and modern economies falls somewhere in mixed economics.
Demand and Its Factors
Demand shows the number of goods and service that customers are ready to consume at
different prices in market. Demand for products or service shows the relationship between prices
of product and its quantity demanded by consumers. High demand of goods are consumers only
at low cost by consumers and high price of products how low demand of products in market is.
Demand is totally depend on price of product which shows the behavior of consumers at each
price of products. These demand are changing with price and also with other factor which affect
the products demand in market (Tridico and Pariboni, 2017). The amount of commodity that
consumers is ready to purchase under their affordable range and manage accordingly to taste and
preference of customers towards products. The factors of demand that affect is price of own
commodity, price of related goods, income of consumers, taste and preference of consumers and
other miscellaneous factors. However, this are some factors which affect the demand of products
in market due to various factors. This will either make favorable to consumers or goes against
demand and affordability by consumers.
Change in demand and change in quantity demand
Change in demand of product can be scene when buyer is willing to purchase different
quantity at all possible prices in market. It is shown in graphical by shift of entire demand curve

due to change in determinate of demand. It is due to change in other factor which affect the
demand of products and shows the change in demand. This determinates are income of
consumers which can be increase or decrease, taste and preference of consumers for products,
change in price of other goods and future expectation in change in price of goods (Novikov and
et.al.,2018). Change in demand shows with rightwards or leftwards shit of demand curve and
found new curve in market.
Change in quantity demand shows consumers are willing to purchase products at
different price charged by suppliers in market. The consumers consume different level of goods
at different price of product. Consumers willing to purchase more if prices are low in market and
consume less if prices are high in market. This can be shown through movement of demand
along with demand curve. The movement is upward which shows less demand due to high price
in market and downwards movement shows the increase in demand by consumers due to low
prices.
D D2
D1
Quantity
Price
Price
Quantity
P
P1
P2
Q1Q2 Q

Supply and its factor including Equilibrium Price and elasticity of demand
Supply of products refers to shift in supply curve towards rightwards and leftward in
entire price and quantity relationship that define the supply curve. There is direct relationship
between price and supply of products. If there is increase in price of products, supplier with
increase the supply in market to earn more profits but if market price are low then suppliers will
reduce the market supply to avoid low margins and loses. The factors that are affected supply of
product in market is due to other factors other than price (Planer-Friedrich and Sahm, 2020).
These factors are change in substitute price of products, cost of production, technology changes,
income of consumers and tax rate by government. This will affect the supply curve in market and
can be shifted either left or right.
The equilibrium price is the price where demand of product is equal to supply of product
in market. This points shows customers and suppliers are satisfied in market. Consumers are
willing to purchase at this point and seller is ready to make sell in make and shows demand is
equal to supply at current point.
Elasticity of demand shows the change of price that affect its demand. It means change in
percentage of prices shows percentage change in quantity demanded. They are depend on the
price of commodity, price of related goods and consumers income etc.
Market structure and types of imperfect competition
Imperfect competition refers to that market where is does not meet the hard assumption
of theoretical perfectly competitive market (Farboodi, Jarosch, and Shimer, 2017). In market,
firms are selling different products with own prices, competition for market share and are
protected by barriers to entry and exit of companies. Imperfect competition is commonly scene
in monopoly, oligopoly, and monopolistic competition.
The major type pf imperfect competition are oligopoly where only two sellers are
available in market, monopoly where only single seller is available and monopolistic competition
where sellers are selling different goods in same market.
Consumer behavior and firm production decisions
Consumer’s behavior are very dynamic in market where major of consumers are looking
for low price products with high quality. The demand for this type of products are always high
until its alternative are available in market. This can affect the production decision of firm
consumers taste and preference can be change at any time with the change in market
environment. This can be overcome only when firms are analyzing the market frequently and
able to know the future demand of goods (Cui, Wu, and Tseng, 2017). However, consumers
behavior is change with change in market and company affect company production decision.

CONCLUSION
The above essay conclude that, economic and business economic shows that relationship
between micro and macroeconomic which are interrelated to each other at some point. The major
problems forms are facing at initial are What, How and Whom to produce goods. Some
economic system shows the models which are given by author for development of economy.
Further, demand and supply of products and factors which affect the whole demand supply
curve. Price equilibrium point and elasticity of demand which shows the equal point meet by
demand supply. However, market structure and types of imperfect competitor in economy
working in same market and consumer’s behavior are changing with the change in price or
quality. It affect company production decision and market supply.

REFERENCES
Cui, L., Wu, K.J. and Tseng, M.L., 2017. Selecting a remanufacturing quality strategy based on
consumer preferences. Journal of Cleaner Production, 161, pp.1308-1316.
Farboodi, M., Jarosch, G. and Shimer, R., 2017. The emergence of market structure (No.
w23234). National Bureau of Economic Research.
Izagirre-Olaizola, Jand et.al., 2020. Reinforcing the involvement of students in learning business
economics through active methodologies and student response systems. J. Manag. Bus.
Educ. 3. pp.29-46.
Larisa, G.C., Galina, A.T. and Stanislav, Y.B., 2018. Innovations as a factor of state’s improved
performance in the World Economic System. Innovations. 39(04). p.22.
Mendy, J. and Hack-Polay, D., 2018. Learning from failure: A study of failed enterprises of self-
employed African migrants in the UK. Journal of Small Business and Enterprise
Development.
Novikov, N.Vand et.al.,2018, July. The Third Dimension of the Supply-Demand Diagram.
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Planer-Friedrich, L. and Sahm, M., 2020. Strategic corporate social responsibility, imperfect
competition, and market concentration. Journal of Economics. 129(1). pp.79-101.
Powell, M. ed., 2019. Understanding the mixed economy of welfare. Policy Press.
Rao, S., 2021. International business environment. Himalaya Publishing House.
Stumpf, K. and Sommer, B., 2019. The Economy for the Common Good: A European
countermovement against the destructive impacts of laissez-faire capitalism?. Culture,
Practice and Europeanization. 4. pp.103-115.
Tridico, P. and Pariboni, R., 2017. Structural change, aggregate demand and the decline of
labour productivity: a comparative perspective (No. 0221). Department of Economics-
University Roma Tre.