The purpose is to identify fundamentally strong companies or industries and fundamentally weak companies or industries. Investors go long purchasing with the expectation that the stock will rise in value on the companies that are strong, and short selling shares that you believe will drop in value with the expectation of repurchasing when at a lower price the companies that are weak.
In order to best understand how microeconomics applies to the real world, we'll go over the case of a car maker, General Motors GM. Microeconomic Failure At one time, General Motors was among America's most profitable companies and a colossus of the automobile industry.
ByGM had fallen on hard times, the victim of a slumping U. Trouble at the microeconomic level began for General Motors several years before its problems worsened in late Toyota made a cheaper car with better gas mileage that was of better overall quality, and was engineered for greater durability than its chief competitor, GM.
Bad Decision-Making Although the general economy played a role in GM's fall, which eventually led to its bankruptcy inseveral GM management decisions at the microeconomic level contributed to the problem.
The number of units manufactured for each of these brands represented too much output, a situation in which the marginal revenue is less than the marginal costs. Second, as gasoline prices rose, spurred by rising oil prices, GM continued to build gas-guzzling SUVs and pick-up trucks — such as the Hummer — and failed to produce cars that kept pace with the high mileage-per-gallon vehicles produced by Toyota and other Japanese manufacturers.
Finally, in Free microeconomic analysis of any industry to high consumer demand for fuel-efficient or alternative-energy vehicles, GM began developing hybrid vehicles, but only long after its competitors had brought them to the market.
Too many microeconomic decisions at GM proved unsuccessful. Automobile Industry Has Changed. A Happy Ending Still, as the economy continued to improve following the Great Recession, GM forged an unexpected comeback — despite enduring significant brand damage and costs associated with a massive recall in the years following the bailout.
Key to its rebirth were the government-assisted corporate restructuring — complete with a new IPO — a long-needed emphasis on creating quality products and a new focus on satisfying customers with top notch customer service. A classic success story is FedEx.
Founded inthe service firm is one of the world's largest express transportation companies. Initially, FedEx had a simple but powerfully effective business strategy that was summed up in its early advertising slogan: Smith, who founded FedEx, was aware of the growing consumer demand for prompt, dependable overnight delivery of packages and documents.
Smith's microeconomic research in advance of starting his firm provided the data necessary to confirm an idea he first developed when he was studying economics at Yale.
Understanding Demand and Adaptation In the early s, the U. Postal Service was not as reliable as it would later become, and postal rates were increasing. Smith's unknown start-up firm would provide the service that the post office could not, at a reasonable price, and demand for Fed Ex service grew exponentially through the years.
As the firm matured, several new and critical price and technological challenges arose, which threatened FedEx's market share. These included the entry into the express carrier business of the U. On the technological side, fax transmissions and emails could now deliver almost instantaneously what previously could only be delivered overnight.
In response to this challenge, FedEx concentrated on items that could not be dispatched via phone lines or electronically and expanded into foreign markets. With its own fleet of aircraft, FedEx was an effective competitor against most of the other carriers, which used commercial flights for delivery.
These moves reflect simple microeconomic decisions — when demand declined for overnight deliveries of materials which could be sent via email or fax, the firm focused on other services, vigorously advertising what the market demanded at a competitive price.
Opportunity costs, as discussed in a previous chapter, are the tradeoff concept. With a limited budget, a consumer may be able to afford two items he or she desires, but cannot buy both.
Buying one rather than the other is the opportunity cost. Suppose a consumer wants an expensive chocolate cake, a loaf of bread and a pound of sliced ham to make sandwiches for her school children.
In a down economy, the consumer on a tight budget would likely chose the more practical purchases — the bread and ham. The cost for this decision — the opportunity cost — is the chocolate cake.Macro and micro analysis of labour markets.
There are two sides to labour economics. Labour economics can generally be seen as the application of microeconomic or macroeconomic techniques to the labour market.
Microeconomic techniques study the role of . The Socrates (aka attheheels.com) and Berkeley Scholars web hosting services have been retired as of January 5th, If the site you're looking for does not appear in the list below, you may also be able to find the materials by.
North South University is the first private university of Bangladesh, It was established in Approved by the University Grants Commission (UGC) of Bangladesh. For instance, in microeconomic analysis we study the demand of an individual consumer for a good and from there we go to derive the market demand for a .
Partial equilibrium is a condition of economic equilibrium which takes into consideration only a part of the market, ceteris paribus, to attain equilibrium.. As defined by Leroy lopes, "A partial equilibrium is one which is based on only a restricted range of data, a standard example is price of a single product, the prices of all other products being held fixed during the analysis.".
Microeconomic Analysis: Installation of Solar Panels - Microeconomic Analysis: Installation of Solar Panels Introduction The U.S. government has a plan intended to promote consumption of solar energy as an alternative source of energy (Hoover, attheheels.com, ).