Micro and macroeconomic conditions of a business

by | Nov 17, 2021 | Homework Help

Create a 6 page paper that discusses micro and macroeconomic conditions of a business. The factor to be considered is the supply-demand aspect. This should be done with little interference to the core agenda of profit maximization. While finding equilibrium between the supply and demand factors of production which include labour and capital should be considered as well. The internal factors should integrate well with external factors in ensuring that an informed decision is made. The strategies involved should satisfy the internal market while aiming at benefiting from the diseconomies of scale. A lower cost per unit will be achieved by increasing the size of the firm.&nbsp.&nbsp.In some instances, the government decides in borrowing from the private sector. The result is reduced power to spend by the manufacturing firms as the available funds focus more on ensuring a balanced in their profit-making goals and reduced expenditure. The government, on the other hand, borrows from the sector to reduce the government deficit. The result of borrowing from the sector is reducing the spending power of the firms. The firm should critically analyse the government decisions to borrow from them as a means of increasing the aggregate demand (Grossman & Hart, 1986). The firm should consider its internal goals before falling victim to government policies. The firms should decide on which policies are to be adopted and which are to be ignored. Adjusting to these policies may assist the firm operates at equilibrium with all other factors kept constant. The other policies by the government may include the increase in bank rates offered by the central bank as a means of reducing the amount of money in the supply. The result increases the interest rates that eventually reduce the rate of borrowing. The result may be reduced funding to the firm. The firm should counter this by ensuring there are several avenues of raising funds rather than profit plough back (Holmstrom, 1999). The expansion of any given firm depends majorly on its market advantage and a large pull of resources.

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