Enterprise Economic Enviroment

After went through the teaching material ,I felt that the scope of Enterprise Economic Environment is very broad .

First of all, I know what is economic and the difference between micro economic and macro economic. Economic is how the individual and society choose to allocate scarce resourse in order to satisfy unlimited wants. Micro economic which exam the individual decision making units. Macro economic apply an economy wide perspective that focus on inflation, unemployment and the growth rate of economy.

Then I see the law of demand, supply and market. The determinants of demand and supply are total different. It seems that the determinants of supply are more complicated than demand. With the effect of demand and supply, the market trend to reach the equilibrium point and with the influence of shift of demand or supply, the market will automatic reach another equilibrium point. So the demand and supply are invisiable hand to adjust the market. Price elasticity is talking about how price change will have the impact on demand and different machandise have different price elasticity. So we will have different price strategy for different goods and different market. With this kind of arrangement, company will maximize the demand and profit.

At last part of this session is talking about some theory associated with manage the company and how to make good decision. Such as opportunity cost and economic profit. Base on different data we may get totally different conclusion and different decision. The example on the ppt show us that one transaction seems profitable based on accounting profit, but should not be accepted base on calculation of economic profit. Another important tool for analyzing supply is marginal analysis.