Answer to Question #188727 in Microeconomics for fahmida faiza

Question

Write up an essay in 300-400 words

'Importance of microeconomics in business decision making.'

Answer 1

Microeconomics is important in business decision making because it helps decision makers to determine and analyze the productive resources that are allocated to them. The allocation of the resources most of the time are for products and services . To add on that, it helps them in solving the dilemma of producers concerning what to produce, whom to produce to and the quantities required in the production.

Microeconomics plays an extensive role in explaining how the prices of different commodities are determined . It is through that it helps decision makers in making wise choices. Microeconomics is additionally responsible for explaining the prices for the various factors of production like land, labour, capital, interest and entrepreneurial profits as determined in the factor and commodity market. In business decision making Microeconomics helps in the studying of firms, households and Individual behaviours of people when allocating resources. It also facilitates easy comprehension of the economic system by providing required tools which enable the formulation of different kind of various economic policies. All those are the importance of microeconomics in business decision making.