Chapter 2 Microeconomic Analysis Learning Journal

Name: Romeo Bordallo Jr.

Subject: Microeconomics Analysis
Professor: Maria Corazon E. Mercado, DBA

It was stated in the report last time the difference of microeconomics and
macroeconomics. As the word implies macroeconomics deals with large, or aggregated,
economic choices faced by society. In contrast, microeconomics deals with small, sometimes
individual economic choices faced within any society.
It made me realized that every human beings have unlimited wants. Our wants as
human being can never be satisfied in this world like for example we always dreamed of having
a nice car, a big house, gadgets and many other things but once we have these things in our
hands we always aspire more for other things.
Scarcity is simply a concept that human wants exceed the resources available that are
necessary to produce the goods to satisfy those wants. It is a fact that our resources are limited
in this world therefore we have to make wise choices or decisions to satisfy our wants for the
time being.
I learned that knowing the opportunity cost is very important to make better economic
decisions. The concept of opportunity cost helps us to choose the best possible option among
all the available options. It helps us to use every possible resource tactfully, efficiently and
maximize economics profits.
Lastly, I learned the difference between monetary price and the relative price. Actually,
the monetary price is the fair market value of a good or services while the relative price is the
price relative to goods and services. It means it is a price in relation to another product for
example a price of a car is P500, 000 and the price of a house is P1, 500, 000 the relative price
would be 1, 500, 000/500, 000 that means I could buy 3 cars instead of buying just 1 house on
the other hand I could buy 1 house in exchange for buying 3 cars. The majority of the
companies consider the relative price over monetary price in their decisions. When a relative
price of an item increases due to an increase in demand this sends a clear signal to economic
agents to shift resources to a products or services that yields more profits. Relative prices
determine where our scarce resources are allocated.