INTERNATIONAL UNIVERSITY

OF EAST AFRICA

ASSIGMENT OF MICROECONOMICS

LECTURE: RICHARD WEMESA

NAME: MUHIDINABDULKADIR MOHAMED

REG NO: 22/1112/BPLM-J

Microeconomics:
is that branch of economics that deals with the behavior of individuals, firms
and households in decision making and resource allocation.

EXAMPLES OF MICROECONIMOCS

DEMAND:

How demand for goods is influence income, preference, prices, and factors such as
expectations. Demand refers to a consumer’s willingness to buy goods and services and the
desire to pay for the same.

Supply:

How do producers decide to gain access to markets, scale production and eventually get out
of markets? Supply refers to an economic term that entails the quantity of a particular product
or service that suppliers are willing and able to offer consumers at a certain price for a
specific stipulated time frame according to examples of micro economics.

Price

How individual persons, households, and companies react to the price of goods and how they
eventually influence it with their demand and supply.

Elasticity

This is how demand and supply react to change. For example, when a family demands less of
a good whose price goes up and opts for the alternate substitute. Let’s say a family that
enjoys Irish potatoes for breakfast can substitute for sweet potatoes in an event where the
price of the former rises

Competitive advantage,

refers to factors that allow a company to produce goods or services better or more cheaply
than its rivals. These factors allow the productive entity to generate more sales or superior
margincompared to its market rivals.” Competitive advantage, therefore, an example of micro
economics is a business attribute that gives a business entity leeway to outperform its
competitors.
Concepts of economics

 Scarcity:

 is one of the key economic concepts In economics it refers to the limited availability of
resources for human consumption. The world population needs are unlimited, whereas the
resources to meet the needs are limited. The limited feature of resources makes it more
valuable and expensive. Effective resource allocation techniques and integration of
alternatives confront the scarcity issues. Examples of scarce resources are oil and gold. Its
scarcity will limit the human want for it.

 Supply demand

Supply refers to the number of goods and services available for consumers, the law of
supply states that as price increases also supply increases and vice versa, hence the
supply curve is upward sloping.

 Demand indicates the number of goods and services consumers are willing and able to
purchase. According to the law of demand, as price increases, demand decreases and
vice versa. Therefore it points to a downward sloping demand curve. If demand is
greater than supply, the price of goods and services tends to increase in a market, but
the price decreases if supply is greater than demand. The equilibrium price happens
when the supply meets with demand.

Incentives
refers to the factor that influences the consumer in the decision-making process. Two types of
incentives are intrinsic and extrinsic incentives. Intrinsic incentives originated in the
consumer without any outside pressure, whereas extrinsic incentives developed due to
external rewards. For example, the decrease in the price of a discretionary item is an
incentive to purchase that item.

Trade-off and Opportunity Cost

A trade-off occurs when a decision leads to choosing one thing over another. The loss
incurred by not selecting the other option is called opportunity cost when one option is
selected.

 Economic system 
comprises various entities forming a social structure that enables a production system,
allocation of resources, and exchange of products and services within a community.
Microeconomics and macroeconomics

Microeconomics

is the branch of Economics that is related to the study of individual, household and firm’s
behavior in decision making and allocation of the resources. It comprises markets of goods
and services and deals with economic issues.
The key role of microeconomics is to examine how a company could maximise its production
and capacity , so that it could lower the prices and compete in its industry.

Macroeconomics:

Macroeconomics is the branch of Economics that deals with the study of the behavior and
performance of the economy in total. The most important factors studied in macroeconomics
involve gross domestic product (GDP), unemployment, inflation and growth rate etc.
It studies the association between various countries regarding how the policies of one nation
have an upshot on the other. It circumscribes within its scope , analysing the success and
failure of the government strategies.

Significant of studying economics

1 Understanding how the world works:

Economics provides a framework for understanding how individuals, businesses, and

governments make decisions and interact with each other. It explains how resources are
allocated and how goods and services are produced and exchanged in a market economy.

2. Making better decisions:

Economics helps individuals and organizations make better decisions by providing tools for
analyzing costs and benefits, understanding incentives, and predicting the consequences of
different choices.

3. Solving real-world problems:

Economics can be applied to a wide range of real-world problems, such as poverty,

inequality, climate change, and international trade. It provides a way to understand these
issues and identify potential solutions.
4. Developing critical thinking skills:

Studying economics requires critical thinking and analytical skills. It helps develop the ability
to evaluate arguments and evidence, identify logical fallacies, and make evidence-based
conclusions.

5. Career opportunities:

Studying economics can open up a wide range of career opportunities in fields such as
finance, public policy, consulting, and academia.

6
Overall, studying economics is important because it provides a way to understand how the
world works and helps individuals and organizations make better decisions in a complex and
interconnected global economy.

REFERENCES
References
Investopedia
By
ADAM HAYES
Updated June 29, 2022
Reviewed by CHARLES POTTERS
Fact checked by

LAWOFSUPPLY
By
JASON FERNANDO
MICHAEL J BOYLE
Fact checked by By
JASON FERNANDO