Answer to Question #213223 in Microeconomics for sfpi

Question

1. Discuss the difference between individual and market demand.

2.     How does the study of managerial economics help a business manager in decision-making? Illustrate your answer with example from output and pricing issues.

1. Explain the difference between micro and macroeconomics?
2. State why managerial economics should be thought of as applied microeconomics?
3. Explain the difference between short run and long run production.
4. What does perfect completion mean? State few assumption of perfect competition.
5. Discus the idea of wealth- maximization objective of the firm and its relevance comparing to that of the profit maximization objective?
6. Why do monopolies arise in the market?
7. Discuss the types of price discrimination using example.
8. Explain the difference between market segmentation and targeting strategies.

 

Answer 1

Individual demand is the demand of an individual or a firm, it is influenced by an individual's preferences and taste. This demand represents the quantity of a good that can be purchased by a consumer.

Market demand- refers to the aggregate of all individuals demands.Shows the total quantity demanded by all consumers.

Managerial Economics

Managerial Economics provides guidance in managing the pricing activities of the business. This proves important in raising the required data in pricing and getting the maximum benefit.

Difference between microeconomics and macroeconomics

Microeconomics is the study of economics at the individual, firm or company level while Macroeconomics is the study of the national economy as a whole. It is the study of totals and aggregates.

Managerial economics as applied microeconomic

Managerial economics applies microeconomic principles, theories and techniques to make management decisions.It is a smaller scope compared to microeconomics.

Differences between long run and short run

Short run refers to a period in production cycle when at least one factor of production is fixed while long run alludes to the period in the production cycle when all factors of production are varying.

Meaning of perfect competition

is a theoretical market structure that meets conditions such as;

• All firms sell an identical product
• All firms are price takers (they cannot influence the market price of their product).
• Market share has no influence on prices.

The above are the assumptions made in the case of a pure/perfect market structure.