Aspects Basic Micro Economics
Micro Economics peeling from the viewpoint of economics interests smallest economic units.
I. Demand, supply and market equilibrium
Demand theory to explain the nature of the buyers to demand a good.
1. Function request
Demand function is an equation showing the relationship between the amount of demand for certain goods and all the factors that influence it.
Based on the factors that affect demand, it can be prepared a general demand function, as follows:
Qd = f (PQ, Ps.i, Y, S, D), where:
Qd = quantity of goods demanded
Pq = price of the goods themselves
Ps.i = price of substitute goods (i = 1,2, ..., n)
Y = income
S = taste
D = total population.
The theory of supply explains the nature of the vendors bidding in the supply of goods.
3. Supply function
Supply function is an equation showing the relationship between the number of goods offered by the seller and all the factors that influence it. Supply function is generally written:
Qs = f (PQ, Pl.i, C, O, T), where:
Qs = quantity of goods on offer
Pq = price of the goods themselves
Pl.i = price of other goods (i = 1,2, ...., N)
O = corporate objectives
T = level of technology used.
4. Market equilibrium
Price and quantity of goods traded in the market is determined by demand and supply of the goods. Therefore, analysis of pricing and quantity of goods traded in a market, should be based on the analysis of demand and supply of goods simultaneously. Market price or equilibrium price is the price level where the number of goods offered by the seller equal to the amount of goods demanded by the purchaser. In such conditions it is said that the market in a state of balance or equilibrium.
II. Elasticities of demand and supply
What will happen to the demand or supply of goods if the price of goods that go down or up one cent? The answer to this question depends on the degree of sensitivity of each item in response to changes in price. Measuring the degree of sensitivity is called elasticity. The size of a good degree of sensitivity of demand to changes in the factors that influence it is called the elasticity of demand. While offering a good degree of sensitivity to changes in the factors that influence it is called the elasticity of supply.
III. My consumer behavior
The theory of consumer behavior basically learn why consumers behave as stated in the law of demand. Therefore, the theory of consumer behavior would explain why consumers will buy more goods at lower prices and reduce their purchase at high prices, and how does a consumer determine the number and combination of items to be purchased from the income.
1. Cardinal approach
Utility approach cardinal or Marginal Utility: starting point on the assumption that the satisfaction of each consumer can be measured by money or by other units (which are cardinal utility) as we measure the volume of water, the length of the road, or a heavy bag of rice.
2. Ordinal approach
Ordinal utility approach or equal satisfaction curve (Indifference Curve): starting point on the assumption that the level of consumer satisfaction can be said to be higher or lower without saying how much higher or lower (utility which is ordinal).
IV. Perfect competition
Perfect competition is the most ideal market structure, because the structure of this market will ensure the ongoing production activities with a high level of efficiency. Therefore in the economic analysis is often used assumption that the economy is perfectly competitive market. But in practice not easy to determine an industry can be classified into the real market of perfect competition (according to theory).
Generally, there is a close structural characteristics of these markets. However, as a theoretical basis for economic analysis, to study the characteristics of perfect competition is very important.
Market structure as opposed to perfect competition is monopoly. Monopoly is a market structure where there is only one seller, no substitution products that are similar (close substitute), and there are barriers to entry to the market.
1. Characteristics of monopoly market
• There is only one seller. Since there is only one seller, the buyer has no other choice. In this case the buyer only accepts the terms of sale specified sellers.
• No substitutions of products that are similar.
• There are barriers to entry into the market. These barriers may take the form of laws, require sophisticated technology, and requires huge capital.
• As a determinant of price (price setter). By controlling the level of production and volume of products offered by the monopolist can set a desired price.
VI. Competition Monopolistic And Oligopolistic
1. Monopolistic competition
Monopolistic market is basically a market that lies between two extreme types of market forms, namely perfect competition and monopoly. Therefore, the properties of these markets contain elements of nature and the nature of monopoly markets perfectly competitive market. In general, the market is monopolistic competition can be defined as a market where there are many producers / sellers who produce and sell different products tone.
oligopoly is a situation where there are several companies that dominate the market but not many so that the actions of employers that one will affect the policies of other employers.