This involves making a comparison between the costs and benefits of different products and services in order to maximize profits.
For instance, suppose a company X sends one of its employees every day to get some printing done. After sometime, the management realizes this task is tedious and so they plan to buy a printer. Now, the management will carry out a cost and benefit analysis where they will calculate the cost of requesting printouts from outside the company and that of purchasing a printer considering the hidden costs in both situations.
If they find out that the cost of buying a printer is equal to that of sending the employee out for printouts or buying the printer is cheaper than sending an employee for printouts, then they would prefer purchasing a printer to requesting printouts outside the company.
An incentive is the source of motivation to perform a certain task. There are two types of incentives namely; extrinsic incentives and intrinsic incentives. For example, if a company that produces juice wants to increase its production from bottles to bottles every day, it will announce a bonus for workers if they produce bottles per day.
So in this case, the bonus is the source of motivation for workers. Often times extrinsic incentives are in form of money, discounts, awards, bonuses, etc.
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It is not too late. You can also become one of these happy students by availing our services. Microeconomics solves issues on a small level. A good example of a microeconomics problem could be the possible effects of raising employee salaries in an organization. Likewise, what would happen if the company increases salaries for its most productive workers and fires those who are less productive? These are some of the questions that microeconomics tries to solve.
This branch of economics also studies the impact of your own decisions in a principle called opportunity cost. Opportunity cost can be defined as making one decision over another. For instance, you may choose to consume a certain type of food instead of another. This decision involves economy cost as you end up missing out on the benefits offered by the other meal.
Choices regarding opportunity cost may be related to your career too. For example, by choosing one job over another, you stand to gainopportunities but lose others. Because of the narrow focus of microeconomics, it is the best tool for making important decisions in your own life.
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For instance, a microeconomist may look at how low interest rates affect individual borrowers while a macroeconomist would study how low interest rates affect the unemployment rate or national housing market. Macroeconomics would use measures like national income and GDP instead of individual factors to study the impact of a decrease in income taxes.
Economicsis constituted of a wide range of themes that showcase its historical and intellectual development. Some of these themes include:. This is the method used to investigate an economy. An economic methodology can be positive or normative, quantitative or qualitative, inductive or deductive. Economists use mathematical operations like algebra, relationships between economic variables, and equations to make inferences. This is a sub-discipline of economics that studies the processes that prevent or create economic growth, human welfare, incomes, etc.
It covers myriad issues such as agriculture, international finance, industrial organization, labor, resource economics, public finance, international, trade, money and banking, and more. This discipline of economics deals with the application of principles and tools to the analysis and understanding of environmental issues. Environmental economics borrows from both macroeconomics and microeconomics focusing on changes in polices and institutions as well as individual decisions that affect the environment.
There is no doubt that economics is a subject that every student must consider pursuing either privately or as a regular scholar. It is one of the most important subjects academic institutions are offering today to mold future economists.
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