Foundations of microeconomics and macroeconomics
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Microeconomics is considered to be the study of scarce resources. Here, consumers (both individuals and organizations) must make allocation decisions. These three basic trade-offs include which goods/services are to be produced, how to produce them, and who gets them. Briefly explain the three trade-offs within a specific good/service within your local area.
Explain the macroeconomic and microeconomics concepts and how they relate to the management of a global organization.
Critically analyze and evaluate real-life economic problems and opportunities by applying economic concepts, principles, and theory.
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Solution Summary
This solution explains the macroeconomic and microeconomic concepts and how they relate to the management of a global organization. It discusses trade-offs with a service in a local area, using a real example. Sources are provided.
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Briefly explain the three trade-offs within a specific good/service within your local area.
Let us take a vacant land in a town for example. With this vacant land, government has the option to develop it as a hospital or sports complex (which goods/services are to be produced). Now, the government will build that facility which wil provide maximum benefits to the society and is most needed by the people. Since the resource (ie. land) is scare and the best possible use of the land is to be made, the decision will be made on the needs of the society. Let us assume that the government will build a hospital. Now, the question arises about the method of building this facility (how to produce them). This will depend on the available resources in the region. If more of labor as compared to capital is available, the construction of the facility will be more labor intensive than capital intensive and vice versa. This third decision or trade off (who gets them) in this scenario will be in relation to the beneficiaries or users of this new facility. The government will decide which segment of the society will get the benefits of this facility. Government's decision with respect to the pricing of this hospital will reflect the fact that for whom this facility is being built up.
Let us take another real life example of Dell Computers, which manufactures computers and related peripherals.
Consider some of the important decisions a firm, say Dell Computer, needs to ...
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