Effects Of Macroeconomics

Effects of Macroeconomics
Effects of Macroeconomics
Abstract
The following pages focus on analyzing the effects of macroeconomics between countries with the use of economic theory, microeconomic and
macroeconomic fundamentals, and other theories that can be used in this case. The Introduction presents some of the points of view used in addressing
this paper. The following sections focus on describing the macroeconomics effects of fiscal and monetary policies, stock markets, oil prices, but also
other important effects determined by these phenomena. The Conclusions section presents some of the most important issues addressed by the paper.
Introduction
The economies of countries are affected by environmental factors, but also by the economies of other countries. The process of globalization has
increased the influence that countries' economies have on one another. Therefore, it is important to understand how macroeconomics is influenced by
globalization, and how this process influences national economies. This is intended to help countries reduce these effects and increase control on their
economies.
Effects of Macroeconomics Between Countries
There are several effects that can be discussed when analyzing macroeconomic relationships between countries. The most important effects can be
observed regarding the situation of currencies, monetary exchange, monetary policies, trade relationships, imports and exports, and these countries'
economies. It is necessary to understand how countries are
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Microeconomic-Based Analysis Nike
In this project, I have chosen to provide a microeconomic–based analysis on NIKE Inc. The study will include the analytic overview of the general
market of Nike brand, as well as the information about the goods, service, and areas of operation. Throughout the research of this paper, I will
discuss the cost of production, as well as the supply and demand in relation to microeconomics. Moreover, we will look at how supply and demand
of this market regulates the equilibrium of quantity and price, as well as the economical efficiencies where the surplus for consumer and producer is
maximized. Information will be explored to understand why businesses and people make decisions and how those actions we can be used for strategy.
To conclude this research paper, I will take a deeper look and make recommendations for the future profitability, future growth and sustainability of
NIKE Inc. (Hubbard & Obrien, 2015).
History of the Company NIKE Inc., known for its athletic shoes, apparel, and it wide variety of sporting goods is located in the state of Oregon.
NIKE Inc. previously known as Blue Ribbon Sports was originated in 1964 with the idea of importing shoes from Japan and sells them locally. Once
successful, the founders, Bill Bowerman and Phil Knight, decided to market their own brand of athletic shoes. As a result, NIKE Inc. was established.
From there, NIKE Inc. has a long history of success in producing quality, durable athletic merchandise that focuses on the athlete. In

Microeconomic Concepts
Title Page
Charlie Edwards
Contents Page Page
Title page1
Contents page2
1.0 Summary 3
2.0 Introduction3
3.0 Over view of Qantas group3
4.0 Products and Services4 4.1 Economy and Economy plus4 4.2 Business Class5 4.3 First5
5.0 Internal and external factors5 5.1 Internal factors6 5.2 External factors6
6.0 Market structure 7
7.0 Conclusion8
8.0 References9
1.0 Summary
The purpose of this report is to look at and identify the basic...show more content...
5.2.3 Social factors are very important because Qantas must keep improving the fleet of aircrafts to stay ahead of the competition.
5.2.4 The environmental impacts on an airline company can be very dramatic due to the weather conditions which can be very unexpected this can
cause delays it can also pose a risk in the air if an aircraft happens to get caught in it

5.2.5 Companies always have to update their technology because there are other comparison websites which engage higher competition
6.0 Market structure
Qantas is a private sector company. By this they're aiming for increase in profit margins, growth and they want to survive all current economic climates
and most

Microeconomic Topic Article Review: Price Gouging
Microeconomic Topic Article Review: Price Gouging
The recent Time Magazine article "Post–Sandy Price Gouging: Economically Sound, Ethically Dubious," evaluates the recent price gouging by
businesses during Hurricane Sandy (Futrelle). Examples of price gouging include raising prices on batteries and gas to astronomic levels, with the
knowledge that the captive public audience will purchase the products regardless of the price. Businesses that have raised prices include bodegas,
supermarkets and gas stations. Although such price gouging is undeniably an economically profitable business measure, the article argues that it is
ethically dubious since it takes advantage of the public. The principal microeconomic issue at work is supply and demand. The author invokes a
number of economic theorists (both liberal and conservative) who endorse price gouging out of a belief that it is simply the natural manifestation of a
capitalist society that relies on supply and demand. There is a belief that preventing price gouging allows consumers to act with little consequence for
their actions. According to this line of thinking, a business is well within its rights to raise prices because they should respond to public demand; at
other times, there is little demand, so they are wise to take advantage when there is significant demand. Moreover, economic theorists have argued that
price–gouging is positive because it makes people question whether the item they are considering purchasing

Micro Economic Analysis Paper
Microeconomic analysis of iMac Veronica Ionescu Southern New Hampshire University Introduction Microeconomics is analysis of individual firm or
market and their price mechanism. iMacs and their price mechanism would be analyzed in this paper. Supply and demand determine the price of iMacs.
There are many important factors that must be taken into consideration when a decision is made about producing the iMac. Some of the factors are:
demand and supply, price mechanism, the analysis of production costs, the importance of market structure, trade and the competitiveness in the global
economy. Abstract My individual microeconomic analysis paper should respond to the following prompt: Assess how microeconomic variables impact
(1) your...show more content...
When prices are higher the demand decreases and the supply increases and vice versa. The market is in equilibrium when supply and demand
curves intersect. If the quantity of iMacs demanded and quantity supplied are equal the market is in equilibrium. The price where the supply and
demand curves intersect is the equilibrium price or market clearing price. If the market price of iMac is above the equilibrium price, quantity
supplied is greater than quantity demanded, creating a surplus. The price will decrease. Example: if Apple have a lot of iMac inventory that cannot
sell we need to decrease the price, the iMac quantity demanded will increase until equilibrium is reached. When the market priced is below the
equilibrium price, quantity supplied is lees then quantity demanded, we have a shortage. Market price will increase because of this shortage. Example:
iMac is always out of stock, raising the price of iMac the iMac's quantity demanded will drop until equilibrium is reached. Apple is a fierce competitor
in several industries, ranging from personal computers to entertainment media to mobile payment systems.

Interpreting Micro-Economic Conditions
Indicators of Micro–economic conditions in economy (Quarterly).
|Economic Indicators |Dec'2010 |Mar'2011 |Jun'2011 |
|GDP Growth (In Billion) |14,755.0 |14,867.8 |14,996.8 |
|GDP (Changes in %) |2.3 |0.4 |1.0 |
|Unemployment(Million) |14,637 |13,542 |14,086 |
|Unemployment (Change in %) |9.4 |8.8...show more content...
When an individual's income increases, other things remaining the same, that person will demand more goods and services; thus increasing their
consumption. The degree to which a person or economy will spend more of their income on consumption is called the marginal propensity to consume
(MPC). The MPC depends on the individual's economy's savings characteristics. As regards in inflation rate are higher that income rate, the increase of
income will no positive effect in economy.
Interest Rates: Interest rate have been decreased both the first quarter (0.18%) as well as second quarter (0.09 %) Interest rates are defined in several
different ways. There is the rate for real interest which is the nominal interest rate adjusted for expected inflation. This is the rate which influences a
firm's investment decisions. Changes in nominal interest rates are felt within the consumer community as adjustments to the cost of borrowed funds.
i.e. lower federal interest rates equate to lower mortgage rates. When the mortgage rate is lower, people are more inclined to purchase a home. In the
case of consumer interest rates (revolving credit), reduced rates allow for larger purchasing power as well. When credit card rates are lower, purchasing
is higher. Higher purchasing increases retail sales thus directly impacting the retail industry. Higher interest rates tend to drive consumers to tighten
spending and thus impact in a negative manner. Both the housing

Difference Between Macro And Microeconomics Essay
MICRO AND MACROECONOMICS
7 SEPTEMBER 2016
Abstract:
Two branches of economics that are vital to our study are macro and microeconomics. This piece of writing will attempt to differentiate them and
provide a summary of an article from the internet that is relevant to the topic. The writer will also attempt to define a sunk cost, how it differs from a
marginal cost and how he has used marginal analysis to solve a problem.
The difference between macro and microeconomics
A decent attempt to differentiate among the two sub–branches of economics should start with a definition. Microeconomics is "the analysis of
economic behavior at the level of individual market participants, chiefly individual businesses or consumers," (Law, J. [Ed] 2009 p 906) whereas
Macroeconomics is defined as "the branch of economics that studies economies as a whole rather than the behavior of particular economic agents."
(Law, J. [Ed] 2009 p 863.) Therein in the definition lies a vast difference that can be deduced. The former is on a small scale while the latter is on a
larger scale.
Microeconomics analyses how individuals at their personal level will be influenced by scarcity and how this in turn brings about an opportunity cost
that would be a result of their choice. In macroeconomics however, conditions that go beyond scarcity need to be analyzed wholesomely for an
opportunity cost to be realized. Therefore, in microeconomic terms, choices that individuals make will have a

Microeconomic Analysis Questionnaire
BEO2264 MICROECONOMIC ANALYSIS TUTORIAL QUESTIONS TOPIC 1 Question 1 (a) Discuss how microeconomic theory can help to
explain the effects of lowering the minimum wage for teenage employees in the retail industry (b) How is the usefulness of a theory evaluated (c)
"Observation without theory and theory without observation are equally useless in explaining the complexities of the real world". Discuss. Question 2
(a) Distinguish between positive analysis and normative analysis. (b) The following statements were overheard in a conversation between two
students. Student A: "Making unemployed people work for social security benefits is a poor social policy because it is exploitative". Student B:
"Making unemployed...show more content...
There are four people (A, B, C and D) living on the island. Their preferences are as follows: A has a strong preference for pineapples; B has a
strong preference for coconuts; C doesn't care for any pineapples; and D doesn't care for any coconuts. (a) For each of the four people, draw a
representative indifference curve in a diagram (measure pineapples along the vertical axis). (b) Define the MRS of coconuts to pineapples
(MRSC,P). (c) Discuss the shape of each indifference curve you have drawn for part (a) and relate them to the MRSC,P. Question 4 The utility
function that Jane receives by consuming food and clothing is given by U= F*C. (a) In a diagram, draw the indifference curves associated with
utility levels of 12 and 24 (measure clothing along the horizontal axis). (b) Suppose that the price of food is $1 per unit and the price of clothing is
$3 per unit, and Jane has $12 to spend. Graph the budget line that Jane faces in the diagram you have drawn for part (a). (c) From your diagram, find
Jane's utility–maximising choice of food and clothing. (d) What is the MRSC,F at the point of utility maximisation? TOPIC 4: INDIVIDUAL AND
MARKET DEMAND ___________________________________________________________________________ Question 1 What is; (a) A price
consumption curve (b) An income consumption curve (c) An Engel curve (d) An inferior good Question 2 Scott consumes only two goods steak and
beer. When the price of steak

Microeconomics in Daily Life
Econ 1
Professor Carter
December 12, 2011
Microeconomics In My Daily Life
Throughout my life, I have always been reading and hearing about economic issues and concepts, but I never thought about the impacts of economic
models on my personal life. Before learning about microeconomic concepts, I always thought that a course in the field of Economics, would teach me
theories that only apply to the economy of a nation as a whole and not to an individual's life. However, there were a lot of concepts throughout this
course that I found relative to my personal life. Among all the concepts that I have learned in the Microeconomics course, "Opportunity Cost", "Sunk
Cost", and "Supply and Demand" have the most impact on my daily life....show more content...
However knowing the concept of opportunity cost helped me reconsider my decision because I realized that the opportunity cost of paying for the
SUVs gas in a year is equivalent to the value of many alternatives such as buying new alpine skis or renting better condos at the resort. As a result I
decided not to pick that choice and instead spend my money on my alternatives. Since my house is close to Beverly Hills, I sometimes feel the price
discrimination when I shop at the local stores or fill my gas tank at the local gas stations. As a result, most of the times I evaluate my choices and
alternatives in order to find better deals and make better decisions. Often times, I choose Costco as a place to shop for household goods because
the offers that I find there are very less than the maximum amount that I am willing to pay for a good, which confers a consumer surplus for me. I
would rather buy household goods such as toilet papers, laundry tides, and liquors in larger amounts and quantities and pay less, than purchasing
lesser amounts of these goods from a store in Beverly Hills and pay more. However, shopping from Costco is not always the best choice. Driving for
about 5 miles, spending time in traffic, and waiting in the long lines of cashiers are the opportunity costs that I have to pay in order to pay less money.
So measuring

ECON 545: Business Economics
Project Two: Microeconomic Analysis
Situation B For Situation B, Cindy is looking at investing into the renewable energy industry. She is looking at one section of the industry to invest in,
which is that of contracting the installation of solar panels. Cindy, has read, that families and businesses are saving money by going to solar for their
power needed. Also, that there are government back regulation to make solar more assessable to people. For Cindy, she is looking pass the business
opportunity for installing solar planes, but that this product can reduce pollution and help save the environment.
GDP and Solar Energy In the United States and most nations in the world, energy is vital in keeping...show more content...
Solar Resources are not only affecting the GDP for power, but in other areas as well. Over a million residential water heaters are replaced each
year and more are being replaced by using solar power. The solar power is given an opportunity in use solar power as the primary heating source for
homes and commercial buildings. Which can increase the amount of GDP that is spend, yearly on solar and a large share of the energy market.
Business Cycle, Unemployment and Inflation When looking at Renewable Energy, with a closer look at solar energy, there could be an increase in the
use of solar due to the recession or a trough in the business cycle. The cost of renewable energy on the decline and the increase in the cost of more
common energy production, there will be an increase in demand. In the last few years, when economy was in an expansion period, solar power cost
did rise and so did the construction cost that caused projects to be stopped. With the recession, that was worldwide, reduced the overall price for the
construction of solar panels and made for a rapid growth of equipment manufacturing in Asia. This added competition to the market and made it more
affordable to use solar power in the United States. Renewable energy industry is taking more of a foothold, due to an increase in the price of coal and
other raw materials that are

Principals of Microeconomics Essay examples
In the modern economic system presented in the world today, microeconomics, and the study of such, is a vital part of the budding economic scholar.
In most circumstances, microeconomics is based on the cumulative study of how individuals and firms, or a combination of the two, make decisions
regarding the allocation of resources, typically in markets where goods and services are bought and sold. This allocation, or optimization of limited
funds through distribution, usually follows 2 standardized theories: the Consumer and Producer. Consumers usually choose to maximize their available
preference in the market, with a limited income value or time aspect. This is evident in the world economy, with consumers always being fiscally
motivated...show more content...
Within these categories, many sub–markets branch out. Competitive Markers are the most common, having many sellers providing similar products
to many buyers. Competitive businesses make profit based off of the relationship between net and gross income, and depend on providing a more
reasonable price than its competitor. This type of market is seen mainly with a capitalist economy. Monopolistic Markets are similar to Competitive,
but they differ in the type of product. Monopolistic businesses provide differing items that all provide a common service. A Monopolistic business
gains profit by providing a product that the same basic service as another business, but differs in small details that contour to different types of
buyers. The auto industry, proving scooters, motorcycles, automobiles, and other forms of differing transportation is an example. Oligopolistic
Markets are less common, but still prevail in the modern economy. An Oligopolistic business is one with few competitors, basing its revenue off of
"outsmarting" its opponents by analyzing their decisions and predicting the outcome. Having an analysis of an opponent provides the basis for
Oligopoly, as income is based on providing a product that has more features than another product, released to the public around the same time. The
Cellular industry provides a pristine example of the Oligopolistic Market. A Monopoly is one of the more rare markets, mainly due

Microeconomic
I. MICROECONOMIC
Micro–environment is preferred as 'the operating system' which includes the forces that has significant impacts on and can affect the organization's
ability to operate and serve its customer (Chaffey et al, 2009). This is influenced by the need of customers and how services are provided to them
through the competitors, marketing intermediaries, and suppliers within the marketplace (Chaffey et al, 2009).
1. Customer
Airasia provides to its customers the basic flight carrier service and carry the customer 's purpose of traveling between different destinations, but at a
lowest fare among other airlines.(AirAsia Annual Report, 2010) The customers of Airasia are mostly from low and middle class people in society. The
...show more content...
1. Demographic force
Job catalogue and income aspects are the key focuses of Airasia for targeting the segmentation(Kotler et al, 2010). Most the customers of Airasia are
students and low or middle class income people. Students and low incomes people are likely to concern more about fare price, while middle income
people want a balance between price and quality. Eventually, Asia is becoming the potential market of the world and this creates more opportunities
for traveling and carrier services especially in Asia Pacific region.
2. Geographic force
Choosing and activating flight destinations of an airline is critically important, as it will affect the productive of market scale and business expanding
trend (Kotler et al, 2010). For Airasia, the current cities and countries that it is mostly operating are the big cities in Asia and no local flight in one
destination country. This tactic can achieve the faster expanding market goal (AirAsia Annual Report, 2010).
3. Culture force

The customers' consumption propensities are differential as national differences (Jones & Miskell, 2007) which mean of differences in culture.
However, Asia has tried to build up a mixture of cultures and to give different experiences to its customers. In general, Asia cultures prefers to spend
less money and save more, thus spending too expensive flight ticket for traveling is still not an absolute choice for all the Asia customers and because

The Effects of Minimum Wage from a Microeconomic Perspective
Nathaniel Fishburne
Embry–Riddle Aeronautical University
Introduction
The first minimum wage law was implemented in New Zealand and Australia in the late 1900s. In 1940s, George J. Stigler founded the first standard
model of minimum wage. The model predicts that the if "minimum wage system is set above equilibrium wage level, it would create unemployment
because some previously employed workers will lose their jobs while others find it is not worthwhile to work at the minimum wage that is above
competitive wage" (Stigler, 1946, p. 361). Ehrenberg and Smith define the minimum wage as a policy that compels the employers to increase wages
paid to all low–wage employees (2006). According to Lee, "minimum wage is the minimum level of payment recognized by law for work performed"
(Lee, 2002, p.1). However, the fact remains that a minimum wage has social and economic effects, the dynamics that will be discussed in this paper.
According to current statistics, 192 United Nations countries have adapted minimum wage as their primary wage policy. The objective of minimum
wage is to allocate income without rescinding the jobs of low paid employees. Nevertheless, there is no agreement about the effect of minimum wage
on employment. A large number of studies on the impact of minimum wage on unemployment suggest different findings and result on no minimum
wage affect the level of employment in both developed

Microeconomics : The Consumer Perspective
Abstract
This paper explores the different subject matters of microeconomics through the consumer perspective. A broad definition of microeconomics is the
study of how individuals make decisions in the presence of scarcity (Sullivan, 2011). Microeconomics is affected by the law of supply and demand
which is constantly changing by the purchasing power of the consumers and the availability of products. The purchasing power of the consumer is
determined by their wants versus their needs, and what their income can actually afford. Consumers dictate the economic system and with out them,
there would not be a system. Their role is truly significant and keeps suppliers and businesses going. This paper was written off of an amateur video
that summarizes all of the lessons that are learned in microeconomics ("AP Econ Music Video "Microeconomics" SPHS", 2009). Various topics were
chosen from this video, researched in depth, and then examples are given. Articles, websites, and journals are used to support the information that is
written. The material covered that affects the consumer, but are not limited to are:supply and demand, elasticity, surplus and scarcity, opportunity costs
and more. Each topic can be viewed by consumers in different ways, whether it is positive and/or negative. Keywords: microeconomics, consumer,
supply and demand, elasticity, surplus and scarcity, opportunity costs
A Condensed Explanation of Microeconomics Microeconomics is considered the

Micro-Economic Impacts on Tesco Plc
1.0 Introduction
In this essay we are going to evaluate the micro economic factors on the activities and performance of Tesco.
Tesco Plc (2011) states, that the retail industry is a highly competitive environment. Tesco competes with a wide variety of retailers of varying sizes
and faces increased competition from UK retailers as well as international operators in the UK and overseas. Failure to compete with competitors on
areas including price, product range, quality and service could have an adverse effect on the organisations financial results. Tesco aims to have a
broad appeal on price, range and store format in a way that allows them to compete in different markets. There is a risk that Tesco may not deliver their
stated strategy...show more content...
5.0 Barriers to Entry
Barriers to entry are the means by which Tesco's potential competitors are blocked out. Due to Tesco's monopolistic characteristics, Tesco will be able
to enjoy higher profits in the long run as rivals have not diluted market share. Three barriers of entry are:
Patents are legal property rights to prevent the entry of rivals. They are generally valid for an average of 20 years and give Tesco the right to prevent
competitors from using patented products. Tesco can sell licences to competitors for a stated fee.
Using Advertising and Marketing Tesco have developedcustomer loyalty; their club card has played a pivotal role in their customer loyalty. Thus
making demand less sensitive to price; due to advertising leading to an outward shift in demand.
Tesco engage in brand proliferation, as it is a firm which sells a vast range of products, this may portray Tesco differently to consumers. This is
common barriers to entry in these types of markets as it is non–price competitions for household good.
6.0 Porter's Five Forces
In order to evaluate the competitive environment surrounding Tesco, I shall utilise Porter's five forces model illustrated in figure 2.
Figure 6.0.1: Porter's Five Forces Model (Zanthus, 2011)
6.1 Bargaining Power of Buyers 0 The bargaining power of buyers is fairly high. 1 Products that have a slight differentiation; more standardised, the
switching cost is

Microeconomic and Tourism
Microeconomic and Tourism
I. Introduction ..................................................................................... II. The significance of tourism to economic. ................................................ III. The
impact of tourism on local society. ................................................... IV. The effects of tourism on microeconomics............................................... V. UAE
as an example for the subject. ....................................................... VI. Clusters and competitiveness of the UAE. ................................................. VII.
Conclusion. .................................................................................... VIII. List of figures. ................................................................................. IX.
References. ....................................................................................
List of Figures: * Figure 1: Determinants Of Competitiveness. .............................................. * Figure 2: Determinants of Competitiveness
(Sophistication of Company...show more content...
It is worth mentioning that not only poor countries pay attention to the importance of tourism. There are some rich countries that care about tourism.
United Arab Emirates is a good example. Although they have sufficient revenues from oil and gas exports but at the same time they have long term
plans to promote tourism. They "made significant investments to diversify beyond oil production and enhance the quality of its business environment."
There are "numerous world–class development projects throughout the UAE especially in Abu Dhabi and Dubai – from new luxury hotels, resorts,
leisure attractions and shopping malls, to low, mid and high–income residential communities – that dramatically attracts visitors." For example in Abu
Dhabi "Saadiyat Island is undergoing remarkable transformation that will become a world–class leisure, residential, business and cultural hub. Saadiyat
Island's Cultural District will house the world's largest single concentration of premier cultural assets, including the Lord Norman Foster–designed
Zayed National Museum, the Louvre Abu Dhabi and Frank Gehry–conceived Guggenheim Abu Dhabi. A performing arts centre and a maritime
museum will add to the portfolio of leading cultural institutions." There will be also Manarat Al Saadiyat, Monte Carlo Beach Club, Mesopotamia
exhibition, Beach Golf Club,

Immigration And Micro-Economic Issues
Immigration on Microeconomic Issues and Policies are becoming a more and more sizzling topic. However, mostly because of our new president, and
the plans set for immigration as a whole. To understand immigration, it's when someone who migrates from one region to another to seek an
improvement in living standards because the living conditions or job opportunities in the immigrant's own region are not good. The concern is that
immigrates will come over to the united states and receive free benefits (Health, Social, Welfare, etc.) while not actually contributing. Understanding
that the belief of immigration and that it's abusing economy is wrong in my opinion. Don't get me wrong there are some pro's and con's when debating
this issue.
Based on

Microeconomic Theory Essay
Running head: Module 1 Homework Module 1 Homework Michael J Feller Allied American University Author Note This paper was prepared for
ECN 150: Introduction to Microeconomics, Module 1 Homework taught by Dr. Dani Babb. PART I Directions: Please draft a three page long
document in APA format in which you address the questions below. You must cite at least three scholarly sources within the context of your work and
cite your references according to APA style. Please utilize LIRN to help you get started with your search. You may visit the Academic Resource Center
for a guide on how to utilize LIRN successfully. 1.Describe and identify microeconomic theory and contrast it to macroeconomic...show more content...
It may be cheaper to purchase an older truck than a newer car, but in fuel and maintenance, the older truck will cost more. The pros and cons of this
decision are all personal. The lower upfront costs may be more beneficial to one person than to another. A personal decision that I am struggling with
right now is with my credit rating. I have two credit cards that have a high balance. These are both in my ex–wife's possession. They are both
delinquent on payments. I have to decide whether to just take out a high interest loan to pay these off and renew my credit rating, or to let her
financial decisions affect my credit rating. The third principle of individual decision making is rational people think at the margin (Mankiw, 2007).
This states that the benefit must exceed the cost. A personal experience with this would be that I have a truck that gets very low fuel mileage. I
needed a car with better fuel economy, but have bad credit. I weighed the pros and cons of buying a car with a high interest loan, and felt that the
benefit was worth the cost. While some would say there is nothing good to come from this, those who make these choices must feel there is. Mankiw
(2007) points to the difference in value between water and diamonds. A marginal increase in a person's water supply will rarely come at a significant
cost to the person. However, a marginal increase in diamonds is extremely valuable. The forth principle of individual decision making is

Microeconomics Essay
Microeconomics Essay The price of electricity has increased substantially in the last three years, as a result of that; there have been apparent changes
in the demand for electricity for the consumers and it has affected the producers supply market. In the following essay, we are going to look at the
effect of the increase in the price of electricity in South Africa, using the supply and demand framework. The reason for the increase of the price of
electricity is to balance out the supply and demand of electricity. The National Energy Regulators of South Africa (NERSA) has approved a 25%
increase of the price of electricity for 3years starting from 2010 (Roodt, 2012). Supply and demand are fundamental principles of economics, it is what
...show more content...
The increase in the price of electricity is equivalent to an increase in the cost of production. The law of supply states that an increase in the cost of
production will cause a decrease in the supply, provided everything else stays constant (Parkin, 2010).We can clearly see this in diagram C, when the
price increased from P1 to P2, the supply curve shifts from S1 to S2, therefore decreasing the quantity supplied from Q1 to Q2. The equilibrium also
shifts from E1 to E2. As time passes the mining industry will have enough time to adjust to the increase in the price of the electricity, which increased
the cost of production. The supply curve of the mining industry will become more inelastic, this is because in the long run, the suppliers will find other
more sufficient methods to produce gold with less energy. So when the price does increase again, the change in the quantity demanded will be affect
much less. This is shown in Diagram C, when the S2 becomes S3, we can see that the supply curve is becoming more vertical, indicating that the
supply curve is more inelastic. And in the long run, the only thing that changes is the elasticity of the supply curve, the quantity supplied and the
equilibrium remains the same.
3
We can conclude the essay by stating that as the price increases for electricity, the demand for the electricity by the households will decrease

Effects Of Macroeconomics

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