“Applications and Best Practices” Please respond to the following:
- Propose two (2) applications of the knowledge that you have learned in this course to your current or a future position. Provide a rationale for your response. Create a list of three (3) best practices to follow in the field of managerial economics and globalization. Provide a rationale for your response.
Managerial Economics and Globalization
Managerial economics and globalization provides learners with a conceptual framework that they can apply in allocating the firm scarce resources in order to meet its objectives. The course teaches learners how to apply economic analysis in organizations in order to promote organizational competitiveness. Managerial economics and globalization enables learners to gain more knowledge about the impact of trade policies, market conditions, government regulations, and resources to business organizations. By gaining knowledge in this course, the learner can be able to predict how the aforementioned factors might affect an organization in both short-run and in the long-run. In this short paper, I will evaluate two possible applications of the knowledge I have gained in this course and provide three best practices.
One of the applications of the knowledge I have learned in this course is in determining how various changes in the national economy affect various microeconomic concepts and ultimately business operations. In particular, the changes in the national economy are likely to affect interest rates, inflation levels, wage levels, and economic growth. All of these factors have significant impacts on the operations of the business. For instance, rising inflation levels are likely to impact business operations negatively due to increased costs. The interest rates also significantly affect business operations. Interest rates may affect business operations in two ways: firms having overdrafts experience higher costs since they must pay more in interests. Secondly, consumers will have reduced disposable incomes to spend especially if they have debts. This is because they have to spend more in servicing the debts.
The second application of knowledge learned in this course is in determining the optimal levels of output and price in firms under the monopolistic and perfectly competitive market structures. In monopolistic firms, it is possible to determine the price as well as the output level under which maximization of profits occur. The monopolist should set prices at the point where the marginal revenue equals the marginal cost. By using the knowledge learned in this course, it is possible to determine the optimal level of production and the profitability at this point. One can also apply the knowledge to determine the breakeven point for a firm in the perfectly competitive market. Perfectly competitive firm also produces at the point where price is equal to marginal revenue and marginal cost.
Best Practices in the Field
- Understanding market structures
- Understanding the microeconomic factors affecting business
- Macroeconomic factors and their impact to business
One of the best practices to follow in the field of managerial economics and globalization is to understand the market structures. Market structures are critical in determining the behavior of firms and their reaction to changes within the macro and microenvironment. The market structure of the firm also determines how the firm determines output and the optimal price to sell its products. The other best practice is developing an understanding of the microeconomic environment shaping the business. The microeconomic factors include demand and supply, price, suppliers, competitors, distribution channels, and among others. The firm has control over the microeconomic variables. The other best practice involves developing an understanding of the factors within the macro environment. The macro environment factors affect the entire industry rather than the firm alone.