Importance Of The Micro Economic Environment - 1471 Words

Activity one: 1.1Explain the importance of the micro-economic environment to business organisations: Microeconomics looks at how individual players in the economy, such as households and firms, interact. It focuses on the impact that their economic choices have on the allocation of scarce resources to meet unlimited demand. These interactions match what one party wants or demands in economic term and what the other gives in exchange (supply). Each time someone buys a chocolate bar from a newsagent or undertakes the morning paper round, there’s an interaction between supply and demand (ESRC). (P) Demand curve Equilibrium point of DS Supply curve (Q) Fig1.1: equilibrium of consumer demand curve and firm’s supply The Above picture clearly illustrate that where the Demand and supply curves intersect, that is called equilibrium point of demand and supply where consumer demand is equal to supply from firms or production sector and Q shows quantity and P shows price. The collective way of all the decisions on demand and supply, use of resources and opportunity costs made by millions of people or firms sets the price for goods, services, assets and labour demand and supply therefore form the main principle that underlines all microeconomics (ESRC). The microeconomics environment is the study of individuals and firms or organisations, which are directly linked to business. The study of microeconomics focus on subsisting and prospective stakeholders of company.Show MoreRelatedThe Impact Of Economic Condition Of A Business Organization1433 Words   |  6 Pagesinfluenced by the formation of economy. Economics is the fact that can establish or demolish a business. Changes of economic condition of a business organization are the main following factor. The increase of economic condition is the sign of business success. On the other hand a business organization can identify its failure by seeing the decrease of economic condition. 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