Name: Trn Diu Linh

Class: BA-K3
ASSIGNMENT

1. You are a businessman what do you think that microeconomics can support for
your business?
Explain and give examples for your explanation.
2. Take the case of Apple when sell iPhone to explain how good they apply
microeconomics in their business.
Answers:
1.
Microeconomics is the study of how households and firms make decisions
and how these decisonmakers interact in the marketplace.
How can the firms decide the price for their products? Why some consumers
are willing to pay at a higher price for one goods or service? How can the
consumers decisions effect to the price of goods and services? To answer these
questions, each firm has to understand fluently the microeconomics.
I am a businessman, and I think that the role of microeconomics is very
important to the survival of my business.
Firstly, a central principle of microeconomics is that households and firm
optimize, especially, the way that households and firms make decisions. Those
decisions depend on when consumers buy goods or services, the price of goods
and services at the time of consumption or the way a firm puts the price to goods
and services. Microeconomics concentrates on demand and supply. When
consumers have needs and wants, firms will search a process to make goods and
services to satisfy this demand of consumers. That is the basic reason of
microeconomics: Each individual makes a decision based on the utility- the level
of happiness or satisfaction associated with alternative choices; each firm makes a
decision based on the competition- each firm have to face with in the market.
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Secondly, microeconomics talks about the total utility and marginal utility.
As I mentioned above, each individual makes a decision based on the utility, if
consumers see that they can have many benefits from one goods or service, they
will buy this goods or service. Consumers can decide to buy any goods and
services to satisfy their demand, so every firm have to focus on the marginal
utility- the additional utility received when an additional unit of a goods or service
is consumed.
Thirdly, one of the microeconomics aspects is the opportunity cost. As a
businessman, I have to care of the opportunity cost. When households or firms
decide to buy or produce goods and services, they have to make decisions about
the cost to buy or produce another goods and services. This is opportunity cost. If
my firm sees this goods and services are not efficiencies, I will change the process
to produce other goods and services with the same cost but this goods and services
will bring more efficiencies than the goods and services that are produced before.
Fourthly, microeconomics mentions about the competition. In the
marketplace, every firm will face with the competition. A measure of the
competition that a firm faces with can affect to the price of goods and services. In
the

competition,

microeconomics

talks

about:

- Perfect competition: In perfectly competitive market, there are many buyers and
sellers; identical goods and services; no barriers to their entry or exit; and buyers
and

sellers

have

perfect

information.

- Monopoly: The characteristics of monopoly market are single seller for a product
with no close substitutes and barriers to entry. The barriers to entry consist of
economies of scale, actions by firms or actions by government. Actions by firms to
create and protect monopoly power: Patents and copyrights, high advertising
expenditure result in high sunk cost and illegal actions designed to restrict
competition. Actions by government: Patents and copyrights, government created
franchises

and

licensing.

- Oligopoly: In oligopoly market, there have a small number of firms produce

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most output; a standardized or differentiated product; recognized mutual

interdependence

and

difficult

entry.

- Monopolistic competition: The characteristics of a monopolistically competitive

market are many buyers and sellers; differentiated products and easy entry and
exit. Monopolistic competition has a relationship to other market models.
Monopolistically competitive market is similar to perfect competition in that:
many buyers and sellers; no barriers to entry or exit. Monopolistic competition is
similar to monopoly in that: each firm is the sole producer of a particular product
and the firm faces a downward sloping demand curve for its product.
The firms will put the price to their goods and services based on the
measuring of competition that they have to face with and the profit of firms is
determined by the way firms balance their cost and revenue. The more great
competition in the marketplace, the more difficult for firms put the price to their
goods and services.
Therefore, a businessman can analyze the economy from the way that each
individual and firms affect to the goods and products produced. Especially, firms
need to care of the consumers demand to make suitable decisions and select one
best direction for firms and can satisfy demand of customers.
For instance, I am a businessman and my company produces fast-food. In
this situation, I have to support knowledge of microeconomics for my business. To
start producing fast-food-bread, for example-, my firm have to survey the demand
of consumers first and see that demand of consumers want eat bread in breakfast is
quite high (concentrate on students and office workers). Then, I make a decision to
produce bread to satisfy this demand. So, there has demand and supply. Based on
the result of my company survey, the price of bread in 10,000VND is suitable for
our consumers. In this price, consumers are satisfied and our company also gains
profit. Besides, I still care about how long this demand can survive and I have to
think about the opportunity cost for my company and also for my customers: If our
firm does not produce bread, we can produce pizza or fried chicken instead of
producing bread, and if consumers do not have bread for their breakfast, they can
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choose other food. In this case, I will change the process of company from
producing bread into producing pizza and fried chicken. I know that the utility and
marginal utility of consumers can change several times. When they have one, they
feel the most happiness but when they have two or more, they will not feel
happiness as the first time.
In the marketplace, not only my firm produces fast-food. There are many
firms produce fast-food. In this case, our firm faces with perfect competition:
many buyers and many sellers. Consumers can choose any brand-name that they
want to have and they believe this product can satisfy their demand. So, to
compete with other firms, I will change the price of our product or improve the
quality of product or have some promotion if consumers use our product.
In addition, to have a great productivity, I will hire workers who have skilled
and give them an attractive salary with many benefit.
I think that microeconomics plays an important role in every firm. To
develop industry, each firm have to understand the role of microeconomics, then
they can analyze the demand, competition and they can make good decisions.
2.
In the marketplace, there are many firms which produce mobile phone. One
of those is Apple Company. Apple is famous for their technological devices such
as mobile phone, laptop, and tablet and so on. Iphone is a famous brand-name of
Apple. Thanks to iPhone, Apple becomes a well-known company all around the
world. In this situation, Apple is good at applying microeconomics in their
business.
Firstly, products of Apple are very creative and inventors are also consumers
who have demand to use this product. Engineers in Apple are professional, they
use their creation to make iPhone become a smart phone with modern design and
easy to use. Everything they think and they make is everything that consumers
want to have. To attract many professional engineers, Apple gives many special
offers: In Apple, they can create by their thinking, give their own opinions and
they can get a high salary.
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Next, Apple expands their market all around the world. Their products serve
consumers from all walks of life. That is the reason why the marketplace of Apple
is larger than that of other mobile phone firms. With the highest success, Apple has
to face with many competitors. Despite of strong competition, Apple always has a
good process to deal with their competitors. Apple knows how to satisfy their
consumers, in each new version of iPhone, it will have new function, new
advantages, be more modern and express the creation of Apple.
Thirdly, offer great consumer service and inshore experiences. When
consumers go to buy iPhone at every branch of Apple, they will feel comfortable
with service of Apple staffs. Apple staffs are willing to answer all the questions,
give detail information to consumers what they need to know.
In addition, Apple has a great marketing. After an identification of a new
product or reading the information of this product and you are attracted, what
would consumers do? Consumers will want to have this product, of course. Apple
understood clearly that character of consumers, so belongs to the information
about new version of iPhone, they always support the price, and the date iPhone is
launched.
Thus, Apple is really good at support microeconomics in their business.
Apple captured the consumers demand, produced iPhone with many functions,
advantages, modern, easy to use and suitable for consumers from all levels of
society. Besides, Apple also has a creative process to develop their business, attract
more and more consumers to use iPhone and the ways to face with competition.