The Influence of Micro and Macroeconomics on Business Decisions

This report delves into the crucial role of micro and macroeconomics in managerial decision-making. It examines how microeconomic factors, such as demand and cost analysis, influence pricing and production policies, and resource allocation within a firm. Simultaneously, it explores the impact of macroeconomic variables, including GDP, unemployment rates, and government economic policies, on business expansion and overall market behavior. The study emphasizes the interplay between these two branches of economics, highlighting how a comprehensive understanding of both is essential for effective strategic planning and decision-making in a business context. The report also assesses previous research, identifies existing gaps, and provides a framework for further investigation into the dynamics of micro and macroeconomics in business.

Running head: ROLE OF MICRO AND MACROECONOMICS IN MANAGERIAL
DECISION MAKING
Role of Micro and Macroeconomics in Managerial Decision Making
Name of the Student
Name of the University
Author note

1ROLE OF MICRO AND MACROECONOMICS IN MANAGERIAL DECISION MAKING
EXECUTIVE SUMMARY
This paper intends to analyse the role of the macro and microeconomics in the managerial
decision making. This paper will conduct a research about the influence of the studies of macro
and microeconomics in the decision making process of the business. Moreover, the overall
condition of the country impacts the growth and expansion of the business.

2ROLE OF MICRO AND MACROECONOMICS IN MANAGERIAL DECISION MAKING
Table of Contents
Introduction......................................................................................................................................3
Body.................................................................................................................................................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

3ROLE OF MICRO AND MACROECONOMICS IN MANAGERIAL DECISION MAKING
Introduction
The role of the macro and microeconomics in the managerial decision making is
significant. There is difference between the application of the macro and microeconomics in
managerial decision making (Bridge & Dodds, 2018). The firms able to take decisions related to
the pricing and production policies with the help of microeconomics. Whereas, the gross
domestic products of the product and consumer goods are discussed in the macroeconomics.
Hence, these two factor of the economics influence the managerial decision making.
Body
Macroeconomics deals with the economy as a whole while microeconomics studies the
actions of the firm, individual, market and industry (Tsai, 2019). The trade decision and
production plan of the business can be undertaken with the help of microeconomic factors. The
analytical tool of the microeconomics helps to examine the decision making process of the
business. One of the important role played by the microeconomics is to help in optimal resource
utilization of the business. As the available resources are limited, it is essential to allocate these
resources efficiently to produce maximum goods and services for the business. The health of the
overall economy effects the growth and development of the business. Thus, the assessment of the
overall economic condition of the country through macroeconomics will helps to obtain
information related to the characteristics and behavior of the market or particular industry. To
formulate the decisions in terms of business expansion, the role of the economic policies of the
government is vital.
The crucial concept of the business like consumer surplus can be obtained from the
macroeconomics. Therefore, for the effective managerial decision making, the contribution of

4ROLE OF MICRO AND MACROECONOMICS IN MANAGERIAL DECISION MAKING
the macro and microeconomics is significant. Previously many researches have been conducted
related to the role of the macro and microeconomics in the managerial decision making.
However, there exists some gaps in those researches and it failed to examine some aspects of the
macro and microeconomics (Jefferson, 2016). This research paper will scrutinize those gaps in
order to conduct further researches on the field of macro and microeconomics to understand the
significance of these two factors on the managerial decision making. Demand forecast is a major
part of the business, which can be evaluated with the tools of the microeconomics. Likewise, cost
analysis is a pivotal aspect of the microeconomics, which helps to compare cost of production
and suggest suitable measures to control cost of the business.
This research paper will focus on the cost and demand analysis of the business with the
help of analytical tools of the microeconomics. Therefore, it will determine the change in price
of products in response to the demand. In addition, it will also focus on minimizing cost and
maximizing profit of the business. On the other hand, the analysis of the macroeconomics
provides the knowledge about the sectorial variables, which are essential for the business. This
research will take into consideration the assessment of the behavior and characteristics of the
aggregate economy to gain insight about the behavior and characteristic of the individual unit of
the economy. Moreover, other studies of the macroeconomics that contributes in the managerial
decision making process include trade cycle, existence of the unemployment, growth rate,
economic activities and population of the country will be examined in the research paper
(Ciuriak, 2015). The gross domestic product and per capita income of the country influences the
growth of the business. Furthermore, the higher rate of unemployment in the economy creates an
adverse impact on the expansion of the business. The main concern of the production decision is
the product mix. This research paper will investigate the optimal production decision of the firm

5ROLE OF MICRO AND MACROECONOMICS IN MANAGERIAL DECISION MAKING
through microeconomic studies of different production techniques. In addition, the normative
and positive role of the microeconomics on the pricing policy of the business helps to determine
the price of substitutes, the cost of production and the nature of competition in the market
(Abueg et al., 2016). Hence, the research study will analyse the analytical tools of the macro and
microeconomics thoroughly for the decision making process of business.
Conclusion
This research will assess the microeconomic analysis based on the demand ad cost of the
business, which influences the managerial decision making (Madsen & Olesen, 2016). Likewise,
it also examine the growth rate and sectoral variables of the economy to assist the business in
expansion and growth. Therefore, the major contribution of the macro and microeconomics on
the managerial decision making is the significant area of this study. It not only provides the idea
about how economy operates but also focus on how it effects the business.

6ROLE OF MICRO AND MACROECONOMICS IN MANAGERIAL DECISION MAKING
References
Abueg, L., Largoza, G., Sauler, M., & Teehankee, B. (2016). The impact of a common good
model of the firm on prosocial business decision-making of students: an experimental
investigation. In Proceedings of the DLSU Research Congress.
Bridge, J., & Dodds, J. C. (2018). Managerial decision making. Routledge.
Ciuriak, D. (2015). Macro-Structural Linkages and Business Dynamism.
Jefferson, T. (2016). 14 Adding a deeper behavioural perspective to
macroeconomics. Reclaiming Pluralism in Economics, 221.
Madsen, M. O., & Olesen, F. (2016). Macroeconomics after the financial crisis. London:
Routledge.
Tsai, F. (2019). An Overview on Macroeconomics: Ideas, Approaches and
Importance. International Journal of Tax Economics and Management.