blog




  • Essay / Microeconomics Case Study - 729

    Moreover, this implies that production models must correspond to the consumption model desired by the population. For example, have you ever gone shopping for a five-year-old's birthday? Although you may not have known about the hottest toy of the moment, your trip to the toy store may have enlightened you on what to buy (Whiting). Furthermore, to achieve this type of efficiency, resources must be allocated to the production of various goods in order to obtain the maximum satisfaction. In other words, once this goal is achieved, the marginal profit or the amount of cash the person pays for the product will equal the marginal cost or the amount the company must spend to manufacture additional units of a good . illustrates what cause of deviation from economic efficiency and the result of decline and social welfare to its maximum potential even though production efficiency, production efficiency among consumers and efficiency economics of distribution are included in economic efficiency. Although economic efficiency shows us how the economy works, it should be noted that microeconomics does not study the economy as a whole but a small part and the interrelationships of each element.