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When coming up with a successful business initiative, it is of paramount importance to remember that every economic endeavor cannot exist in isolation from socio-political and purely economic factors. For this reason, in order to define the prospects of one’s business, entrepreneurs should become aware of the value of microeconomics in the context of development. Briefly speaking, microeconomics is a branch of studies that allows business owners to examine the peculiarities of a chosen niche market, including the pricing politics and consumer behavior. The application of macroeconomics to the research is of great benefit in terms of examining the economic unitality of a product because the field study might help define the extent to which a chosen product could be a utility for the target consumers. Moreover, the consumption trends within the field help business runners create an exhaustive picture of supply and demand patterns, along with the opportunity to introduce an agile approach to control the prices for the sake of relevance. Thus, it may be concluded that when it comes to managing a business, microeconomics serves as a guide to make a reasonable decision that would be useful for both the business and the customer.
As far as some basic economic principles are concerned, it is important to mention that all of them are crucial for the creation of a successful business model. However, if to choose some of the most important ones in terms of personal preference, the principle of people facing trade-offs and the principle of incentive should be outlined as the most functional ones. First, when creating a working product, one may take into account the fact that while people understand that they have to sacrifice something in order to obtain goods, their desire to lose something is reducing at an unprecedented rate. For this reason, the goal of the business is to sell the idea of not losing something for the sake of product purchase.
The second principle, in its turn, helps define the customers’ behavior, which is highly controlled by external incentives. Thus, when aware of this tendency beforehand, business owners are more likely to modify their product according to a new demand outlined by the incentive. For example, when prices for gas grow rapidly, car manufacturers, instead of making their conventional cars cheaper, could come up with a way to manufacture more market-oriented hybrid vehicles.
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