The Demand And Supply Theory Of Microeconomics

1055 WordsNov 29, 20155 Pages
According to Samuelson and Nordhaus, “economics is a dynamic science and is central to the concerns and problems around the globe” (2003). Microeconomics covers the micro aspects viz. fundamentals, elements of demand and supply, costs, production formation, revenue, markets etc. (Samuelson and Nordhaus, 2003). With that being said, a good knowledge of these above listed aspects is necessary for management students as well as managers. Therefore, a thorough understanding of microeconomics and its principles is vital for effective decision-making. However, since the consumer spending is the engine that drives the economy, businesses continually pursue knowledge of how the consumer decision-making process works to better serve their markets with the most desired of products and services at usually, but not always, competitive prices (Davis, n.d.). The demand and supply theory of microeconomics in term of a specific good or service is one area of microeconomics of interest that is very important in the business world today. Supply and demand is among the most significant basic tools of economic analysis and for any businesses size. Supply-demand analysis is a fundamental and powerful tool of microeconomics that can be applied to a wide variety of interesting and important problems. Economics use theory of supply and demand to answer a wide of questions. Some of them are following according: • Understanding and predicting how changing world economic conditions affect market
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