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Essay Samples > Economics > Microeconomics Essay
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Microeconomics Essay

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Economics is a wide field that basically coordinates the allocation of the existing limited resources among the various competing uses. This ideally means that economics as a profession tends to find the best uses of the limited resources for every use that presents itself to utilize the resource. It is divided into two major categories: microeconomics and macroeconomics. While the former classification tends to address economic issues at household or firm levels, the latter case tends to address issues of economic nature at the aggregate or national level so that the various economic units considered in the microeconomic discussion constitute the macroeconomic class. In this discussion however I will base my discussion on the microeconomics part analyzing in a very specific way the key concepts that shape this classification. These concepts are discussed below and reference made to an article on the freezing cold that rocked Florida leading to unprecedented losses. These concepts include:

 

Demand

            This is a kind of desire for a commodity that is developed by the consumers of the commodity. Demand occurs on a day to day basis considering the needs of consumers are dynamic and grow in variety with each passing day. Human beings tend to develop desire for various goods that would obtain the levels of satisfaction that they yearn for. It must however be noted that it is that presence of a demand that triggers off basically all the economic processes since there has to be a reason behind developed interests for various commodities. This principle is however prone to influencing factors that would vary its levels among different people at different times. Such factors include advertisements, price of the good, price of other goods that would obtain equally high levels to the consumer and many other factors. This aspect of economics is very clearly expressed in the article that acts as the basic point of reference. Being a peak harvesting season, most manufacturing industries that rely on the produce of these fruit farmers to make their products would generally be ready to add to their stock to keep their firms running. In this way, they create the requisite demand. Additionally, the high levels of cold temperatures have resulted into a high demand for electricity to homes. This electricity is then used to operate electrical heating systems that are required to provide the required levels of heat.

Supply

            The process of demand cannot exist in solitude without a consequential supply function. Supply is actually the production of enough goods to match the respective demand levels created by the consumers. The concepts of demand and supply operate hand in hand so that the needs of the consumers are effectively attended to by the producers. The supply function also has influencing factors that affect in one way or another, the efficiency of the supply process. These factors include among others price of input factors, governmental economic policies like taxing for instance. In the case of Florida, the supply of the fruits has been greatly hampered by the prevailing environmental conditions. Such conditions have led to a reduction in the production levels on the part of the farmer and therefore consequent reductions in the level of supply to the industries.

Concept of profits and losses

            This is one of the key concepts that define microeconomics.  Firms always aim at creating significant profits to be able to stay in the business. Farmers who produce these raw materials also aim at recording profits to be able to continue their businesses. This therefore brings us to the question: what is profit and loss? These two concepts work hand in hand and could be explained excellently if the prices of the inputs are compared to the prices of outputs. In the case of a loss, the prices of inputs are greater than those of outputs while in the case of profits it is the price of outputs that is greater. Profits enable businesses, no matter the level of operation, to be able to facilitate all the requisite processes needed for it to function. Losses could be instigated by external sources such as environmental constraints. In this case, it is the loss aspect that is quite evident. The expected production levels have not been achieved since the cold has led to massive losses to the fruit farmers.

National economic policies

            These are the measurements put in place by the relative governments in as far as economic activities are concerned. The key policy adopted by the government in an aim to regulate the economic activities is the taxing system. It is clearly evident in the case of firms where the taxing system does a lot in influencing he supply levels. In this article however, the policy that is being adopted by the government through its concerned council is the waiving of the weight restrictions on trucks that transport the produce of citrus growers such that more frozen fruit is transported to juicers before they spoil.

Concept of market

            A market is actually where the producers sell their produce in exchange of any form of consideration be it money or any the form of consideration. In the case of Florida, the market is predominantly composed of the juicers who are the firms tasked with processing of the fruit collected from the farmers into juice or any other product that makes it easy for these products to be consumed. The activities of the market depend on the amount of produce realized. In this case it is clear that low levels of activities were recorded.

Scarcity

            This is the situation that exists when demand exceeds the existing supply of resources. This is the most basic concept that shapes the economic activities. This is because it is the relative scarcity levels in the occurrence of resources when measured against he existing demand levels that leads to careful allocation of resources. It is a key element in understanding the process of economics. Scarcity is generally a natural state but in some cases could be derived. For instance in the case of Florida, low production levels created a higher demand ratio that consequently contributes to the scarcity levels.  

Opportunity cost

            This is an economic concept that deals with measuring the value of the forgone alternatives. These alternatives always have to be the best considering there always exists in place a large group uses competing for the limited resources. It basically influences the economic process of choosing one use instead of the other in the utilization of resources. The principle of opportunity cost therefore helps one to make efficient economic choices. One key consideration is the price versus output computation that determines the efficiency of any uses chosen. In the case of Florida however, the state agencies are torn between relying on the fish industry and sticking with the fruit sector. This is because the variable temperature levels have caused adverse effects in both cases and reliance in one sector would require the state to carry out proper analysis into the potential outcomes of their actions.

Conclusion

            All the micro economic concepts discussed herein plus others such as the issues to deal with elasticity, market equilibrium and relative prices need to be understood properly before making any economic decisions. They all act together to affect the economic processes that characterize our world today.

 

 

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