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Macro and Microeconomics in Firm Decision-Making

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Articulate how macro- and microeconomics come into play in the context of firm decision-making in a global business.

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This response will emphasize the role of microeconomics and macroeconomics in decision making processes in global businesses. We will also discuss the meaning of macro and micro economics. This will help the reader to understand the effect of different factors associated with economics on the business decision making process.

Micro economics deals with the behavior of individuals, firms and helps them in the decision making process. The manager has to consider certain factors like demand, supply, cost, prices, etc. while making decisions related to allocation of resources as there is scarcity of resources in society. Demand for a product refers to willingness of a customer to buy a product from a company at a particular price. It is affected by various factors such as price of a product, price of substitutes, income level, etc. If all the factors remain the same and there is an increase in the price of a product, then the demand for the product decreases. There is an inverse relationship between price and quantity. Similarly, the supply of product increases as the price of the product increases, because the supplier is ready to sell the goods to the buyer at a higher price, other things remaining the same (Arnold, ...

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  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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