This website uses cookies to ensure you have the best experience. Learn more

Microeconomics Essay

2273 words - 10 pages

AFRICA NAZARENE UNIVERSITY
NAME: IAN GATHAIYA MUHORO
ID NO: 08JBT021
UNIT: MICROECONOMICS
UNIT CODE: BCM 104
LECTURER: PETER MUHIA
TOPIC: ANALYSIS OF THE FACTORS OF PRODUCTION
DUE DATE: 14TH JUNE 2012

PRODUCTION
INTRODUCTION
According to David N Hyman, (1989), production is the process of using economic resources or inputs in order to produce output. The transformation of raw materials into finished goods or services has been a major factor in any economy as this is the major attributes that has help build today’s economy since the beginning of most economies worldwide.
Production on its own is insignificant as there are several factors to consider when producing the end ...view middle of the document...

B. Scarcity
Scarcity is a concept that describes a situation where there is not enough commodity to meet everybody’s wants and needs. (Peter Muhia, 15th May, 2012). In cases such as production of goods, the lack of enough raw material for production of their finished good, leads them to limit their production capacity to a certain amount. They do so in order to minimize purchase cost in order to enhance profitability and also not to run out of production material necessary for production.
Scarcity of products also helps firms regulate their output. The regulation of output enables them to maximize on consumer purchase power and at the same time ensure the products availability to market at a controlled rated. Though scarcity may seem null and void to the service industry, it also affects them in more ways than one. If a service is expensive, the consumers will opt to take the cheaper option from another firm, hence leading to scarcity of consumer.
The service industry usually have to keep their prices at the same level as competing firms since they are competing for the same number of consumers who are scarce and tend to be drawn to the cheaper option.
C. Technology
According to David N, (1989), technology allows us to delay the sacrifice implied by scarce resources by increasing productivity of resources. Technology has revolutionized the production of goods and services. Technology is constantly improving; this is a major boost as it also improves the goods and services being offered.
Technology has over the years been incorporated in firms to improve their production. So far it has enabled mass production of the scarce resources available. This has also led to a sizable increase in profits. It has also led to better management of the firm’s capital and other resources such as labor and distribution.
Though technology has led to improved production, it also comes with a cost as a firm has conceder maintenance cost and upgrading in order to stay ahead of the competition.

D. Cost of Production
According to Robert S. and Daniel L, (2000), cost includes the wages a firm pays its workers and the rent it pays for the office space (but is not necessary if the firm already owns the building). Part of this cost of production includes also purchase of equipment, purchase of raw material, transportation and more.
The cost that a firm attains during its production process will affect the profits, the firms pricing of its products, payment of wages, its acquisition of raw materials and more. The cost of production is a determining factor on how a firm plans its finances in order to ensure maximization of its resources without having to depleting them.
E. Opportunity cost
Opportunity cost is the cost associated with opportunities that are forgone by not putting the firm’s resources to their heist – value use. (Robert S. and Daniel L, 2000). A firm optimizes on its resources which were did not occur any cost, such as lack of renting...

Other Papers Like Microeconomics

Microeconomics Essay

970 words - 4 pages price elasticity of demand for ice cream cones? e. Notice that the estimates from (a) and (c) above are different. Why do price elasticity of demand estimates change along the demand curve? --------------------- References: |Microeconomics: Unit 4 Assignment: CS and PS; Elasticity | |Content (13 points

Microeconomics Essay

1788 words - 8 pages Objectives Tested: 1. Explain key microeconomic terminology. 2. Differentiate between microeconomics and macroeconomics. 3. Create and use economic graphs and numerical models to analyze and solve microeconomic problems. 4. Explain the costs and benefits of international trade, including calculation of gains from trade. 5. Analyze the impact of government activity in markets. 6. Determine optimal consumer buying decisions in the

Microeconomics

1456 words - 6 pages Charles  Zoller     Principles  of  Microeconomics   Final  Paper   12/8/12       Selfish  Reasons  to  Have  More  Kids       In  Selfish  Reasons  to  Have  More  Kids:  Why  Being  a  Great  Parent  Is  Less  Work  and   More  Fun  Than  You  Think,  Bryan  Caplan  describes  why  it’s  in  a

Microeconomics - 1482 words

1482 words - 6 pages Microeconomics Term Paper Tyler Pangborn ECO 204 – Dr. Essuman May 12, 2014 The topic of my paper that I have chosen to write about involves the agricultural industry, as it stands today, and the trend that has been taking place over the last couple of decades in the industry, more specifically, companies like Monsanto, DuPont, and Dow and their growing takeover and market power of the industry in the United States and globally. As we

Microeconomics - 1591 words

1591 words - 7 pages , farmer’s market, and production companies would have to lay off people because there simply wouldn’t be a need for them to be there if the product was no longer selling. So we would have an imbalance with the economy whereby there was an overproduction of tomatoes and a plunging decline from consumers in purchasing them. -------------------------------------------- References: Krugman, P. R., & Wells, R. (2013). Microeconomics. New

Microeconomics Ppt

1788 words - 8 pages Intermediate microeconomics: Lecture 3 Utility and indifference curve Budget constraint Consumer’s problem Perfect complement Perfect substitute Intermediate microeconomics: Lecture 3 March 14, 2014 Preference over bundles Intermediate microeconomics: Lecture 3 Utility and indifference curve Budget constraint Consumer’s problem Perfect complement ◮ ◮ ◮ Two goods 1 and 2. Let (x, y ) be quantity of good 1 and good 2. Now

Microeconomics Notes

1996 words - 8 pages Microeconomics Chapter 1 1.1 The scarcity principle (also called the no-free-lunch principle). Although we have boundless needs and wants, the resources available to us are limited. Consequently, having more of one good thing usually means having less of another. 1.2 The cost-benefit principle. An individual (or a firm, or a society) should undertake a particular action if, and only if, the extra benefits of undertaking that action are at least

Microeconomics - 827 words

827 words - 4 pages Economics 2A Assignment 1 “Consumers are statistics. Customers are people.” Stanley Marcus (1905 –2002) In order to explain HOW economic theory determines the choices of the consumer, we need to know WHAT the theory states. We use the terms baskets or bundles for groups of items, consumer preferences to tell us how the consumer ranks those baskets according to his tastes and we do that by: 1. Assuming the preferences to be complete, and

Microeconomics - 1217 words

1217 words - 5 pages Introduction This paper analyzes and examines the study approached by Deaton and Paxson (1998), their thesis was based on the test of Barten model, which explains positive relationships between the standard of livings and household size. The assumption of their phenomena was that larger households with constant per capita income save on the public goods, e.g. housing, that is they share the cost of it equally and it is free of charge and can

MicroEconomics

851 words - 4 pages James McRae ECO202 Mr. Sowells Unit 1 Application Assignment Would the incentives discussed in the video be able to work in a college setting? Why or why not? No because researchers have documented that when individuals enjoy an activity, paying them can make the activity less enjoyable. Therefore, it would be foolish to pay students who already enjoy school because doing so might actually decrease their motivation to engage in school

Microeconomics - 1489 words

1489 words - 6 pages RESILLIENCE Resilience is the ability of people to cope with stress and catastrophe. It can also be defined as “exhibiting positive behavior even when even in adversity, threats tragedy etc.” it is the ability to bounce back after a disruption. It also means mental toughness, emotional toughness. Commonly used terms closely related to this word are; psychological resilience, emotional resilience, hardiness, resourcefulness and mental toughness

Related Essays

Microeconomics Essay 753 Words

753 words - 4 pages Microeconomics and the Laws of Supply and Demand Joel Dominguez ECO/365 July 30, 2015 Billet Microeconomics and the Laws of Supply and Demand After utilizing the supply and demand concepts simulator provided in our week 2 assignment there were many key microeconomic and macroeconomic concepts that were introduce and explained. There also appeared to be a varying shift in both the supply curve and the demand curve whenever the price for

Microeconomics Essay 638 Words

638 words - 3 pages | Case Study 3 | Economies & Diseconomies ECN 202: Microeconomics | | Sale Economies and Diseconomies at McDonald’s Having a menu that is uniform around the country has provided McDonald’s with economies of scale because they are able to buy products in mass quantity and distribute them throughout the country to their locations. Usually, when purchasing products in bulk the price is much cheaper than purchasing in small

Microeconomics Essay 1359 Words

1359 words - 6 pages Microeconomics examples of topics for essay#1 IMPORTANT Guidelines for essay - You are doing a short research paper. Therefore, you need come up with research questions or thesis. Think what interests you in what we cover in the class. For example, o If you are interested in outsourcing, your research questions could be “Is the US better off or worse off because of the outsourcing to China?”. Then you go do a

Microeconomics Essay 718 Words

718 words - 3 pages frozen turkeys that are stored in advance cannot be changed, so therefore the retailers must force the demand to change throughout the selling process. References McConnell, Campbell R., Stanlet L. Brue, and Sean Masaki. Flynn. (2013). Microeconomics: Brief Edition. Vol. 2e: Demand, Supply, and Market Equilibrium. New York: McGraw- Hill Irwin. 52-71 Rampell, Catherine (2013, November, 19). New York Times. Retrieved from http://www.nytimes.com/2013/11/24/magazine/why-is-turkey-cheaper-when-demand-is- higher.html?_r=0