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Foundations of Economics
INTRODUCTION:
Microeconomics is the branch of economics that deals with the processes that company, households and concerns of the individuals themselves in the allocation of limited resources. In this sense, microeconomics examines how these decisions affect demand and supply and helps determine not only prices but also how these prices affect supply and demand for goods and services in any market segment.
On the other hand, is a sub-discipline Macroeconomics in the field of economics. It concerns itself with the structure, performance and behavior of the economies national. This is to ascertain the determinants of global movements in the economy.
Macroeconomics gives specific attention to inflation, unemployment, international trade, investment and national income.
Helium is an inert gas. As thus has numerous industrial uses. The main industrial use that relates to this analysis is its use in the manufacture of gas balloons, instead of hydrogen, because it is much more manageable. Helio on this market can be used commercial purposes or for gas balloons. If there is a new health report stating that helium inhalation reduces the desire for sugar consumed then The following short-term changes would be expected.
Assuming that the helium supply is constant, then we expect the demand for helium to move from DD1-DD2. This is because more people have the desire to reduce their sugar intake. Moreover, the price of helium will go up. However, this will only be the case only under two conditions. Firstly if the price of sugar is relatively higher than that of helium and, secondly, whether the health of consumers will significantly improve for example, through the reduction of sugar-related illnesses such as diabetes. Regardless, the overall effect will have to rely on the availability close substitutes that have the same effect on the price.
Once this happens the market for helium, the following will happen to the sugar market.
Assuming all other factors remain constant, the sugar market will be greatly affected. Internally sugar consumed no close substitutes. If this report was made credible and had the effect of reducing the craving sugar, then the following scenarios would be expected.
If the substitution effect applies and consumers replace sugar consumption by buying more gas helium balloons then based on the sugar market, have the following effects. As shown in the diagram above shows once again, people reduce their sugar intake in the short term we do not expect that reductions in supply. Due to this reason, then we expect demand to lower sugar. This is indicated in the diagram above as the transition from DD1-DD2. Because of this, we also expect the price of sugar falls a new equilibrium below the previous equilibrium.
BALLOONS THE MARKET:
We expect the market of the balloons have mixed reactions. Given that Helium balloons are based and the industrial price of helium has increased, we expect the price of the balloons to go. This is further complicated by the growing demand. Because of these two scenarios, we expect the price of helium balloons to be relatively high in the short term.
CONCLUSION:
Microeconomics or analysis short-term does not give us the full picture. Therefore, it is necessary to observe some macroeconomic issues. If we make the assumption that the price of helium is relatively low, even after the increase discussed above then you have to look at some of these issues. For example, the government can decide whether to raise taxes on the balloons gas or helium. This could have the effect of changing the price and demand patterns not only in the short term but in the long term. Moreover, in a market free we hope to balance the market mechanisms in the immediate term.
REFERENCES:
Hadjimichalakis M. (1982) the modern economy, Prentice Hall Publishers, New Jersey
Paul Anthony Samuelson (1964) Economics, McGraw-Hill publishers, USA
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