Question

How does the microeconomic environment affect your daily life? What can you do to live a better life after completing this course?

Answer 1

There is a limited amount of time and resources in most countries. We can't buy or do whatever they want, so they make measured microeconomic choices on how to maximize personal satisfaction by using limited resources. Likewise, there is also limited time and money in a business. Businesses must make decisions that lead to the best business result that could be to maximize profit.

Another economic principle that comes into play in making decisions by consumers is the cost of an opportunity. She also calculates the cost of forgetting the next best alternative when an individual makes a decision. For example, you will no longer be able to exchange the miles for cash if you use your frequent flier miles to take a trip to the Bahamas. The lost money is a price of opportunity. Decreasing marginal utility, another economic source, explains the general consumer perception that the less value you get, the more you buy it. For example, you can feel really happy when you eat a burger. But if you eat a second burger, you might feel less satisfied

Both consumers and businesses make thousands of big and small decisions each year in a capitalist economy, guided by microeconomic principles. When customers go out and shop for anything from paper towels to homes, houses, and cars, they seek to maximize their satisfaction. Businesses are setting prices and making other microeconomic decisions. The rates customers are going to pay rely on the availability of a product and how much others are willing to pay for it.

The state of the economy of a nation can have a huge impact on the amount of disposable income we have and the likelihood that we will fall into debt. For example, the working population often has more disposable income during times of prosperity and economic growth and can afford to buy luxury goods. Conversely, if a country experiences economic recession, the average person will have less to spend and policymakers might be able to tighten up on loans.

The economy determines interest rates and is determined by governmental and financial institutions. In short, economics can have a huge impact on your saving potential, as well as other financial processes like mortgage, car finance, and personal loans. Of example, if interest rates are high, you will benefit more from savings accounts, but it will cost much more on the flip side.Many citizens pay tax–this tax is determined by a country's economy and government's current economic climate. For example, in times of need, a government can raise taxes to raise funds–this, in turn, will mean the average family will have less disposable income and may even struggle to pay bills. The revenue you spend in the form of tax on the flip side, for example, will help fund hospitals, the military and law enforcement.