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Microeconomics

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Microeconomics
Paper One
Renee Ingram
Chamberlain College of Nursing
Econ312: Principles of Economics
Spring 2013

MICROECONOMICS 2 Every day individual consumers make choices for products they feel are needed in their lives. Whether out of comfort or necessity, the choices made can determine the standard of living for the individual. Research by McConnell, Brue, and Flynn (2012) argue, “Even though biologically people need only air, water, food, clothing and shelter,” once these basic needs are met, the other items desired are only to make one’s life more comfortable (McConnell, Brue, & Flynn, 2012). However, the choices made by these individuals have one obstacle, and that is how does one chose to use limited resources so as to satisfy these unlimited wants. This is where the idea of economics comes into play. Economics is defined as the basic study of supply and demand of goods in a market structure, and how this market is driven by self-interests of individual consumers for their unlimited wants. For consumers, McConnell, Brue, and Flynn (2012) suggest, “Individuals look for and pursue opportunities to increase their utility---they allocate their time, energy, and money to maximize their satisfaction” (McConnell, Brue, & Flynn, 2012). Since goods or services are limited, the self-interest of individuals will drive them to choose one product or service over another in order to maximize their comfort. Bearing in mind the above stated concepts, economics is broken down into two categories: microeconomics and macroeconomics. This paper will focus on the concept of microeconomics. Microeconomics is the basic theory of supply, demand and how businesses make the decision as to what product to make, quantity of the product made, and most importantly what price to sell the product for in order to make a profit....

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