Research Paper in Microeconomics Definition of Microeconomics & Trends in the Behavior of the Consumer Submitted by: Mae Angelie A. Mananquil Submitted to: Mrs. Cecille Mae T. Aguadera Course & Year: BSBA- 2nd Year Section: D Schedule: MWF- 2:00-3:00pm INTRODUCTION Microeconomics is the economic influences that impact at the micro, or firm, rather than macro level. The study of this subject is one that is highly valuable for any studying business with the provision of knowledge that will increase understanding of different influences and support the decision making processes. With the knowledge gained, along with the skills in applying that knowledge developed through class work and exercises for the different modules, there has also been the development of increased confidence, both personal and in the theories, in using the relevant concepts and tools in a practical setting. Consumer behavior has always been an area of major interest for social science researchers, witnessing an explosion over the past 50 years .Consumer buying behavior refers to the study of customers and how they behave while deciding to buy a product that satisfies their needs. It is a study of the actions of the consumers that drive them to buy and use certain products. Studies on consumer behavior are diverse and extensive as changes in society, economics, and technology affect the way consumers behave. Inevitably, these changes lead to changed consumer behavior studies by which, when, how, and why the topics are studied. Like any other discipline, systematic analysis of the knowledge development status of consumer behavior field is critical in ensuring its future growth. It is of a greater importance for a field of research such as consumer behavior that, as claimed, is thriving by the growing number of articles and topics examined. One way of conducting this systematic analysis is through studying scholarly literature, which can illustrate a discipline’s intellectual history. BACKGROUND OF THE STUDY Information is the key component of the modern economy. While pure knowledge is disembodied, transferring, storing, and processing information is costly 3 for firms and consumers. E-business has such a great impact on today’s economy because ICT lowers the costs associated with information. For businesses, information can be an output itself of the firm, a direct input used to produce an output, or an indirect input that is complementary to other inputs. For consumers, information flowing from businesses helps define both the set of products available and their attributes, and information flowing back to firms reveals customers’ preferences. For workers, information is also a two way channel. Workers want to reveal information about their capabilities to potential employers, and firms want to advertise openings and job characteristics. Viewed through the lens of cost reduction, transformations of the production process enabled by e-business such as outsourcing, just-in-time inventory systems, and e-banking not only make sense but become predictable. Similarly, given the importance of information in search and matching markets such as consumer purchasing and the labor market, the advent of electronic intermediaries such as auction sites and online resume exchanges makes sense. Wherever the costs involved with transacting information are high, the gains from adopting e-business practices are highest and the market will naturally implement ICT there first. Reduced informational costs can not only facilitate given transactions, but can expand the set of transactions included within a specific market. By lowering the 4 costs of bringing together geographically distant buyers and sellers, e-business increases the size of any given market. Larger markets make the trade of goods and services more reliable and efficient, in part because bigger markets often have lower average costs associated with them. However, the aggregation of information in larger markets is beneficial in its own right, especially compared to the bilateral negotiation between economic agents that e-business may replace. The inefficiency of bilateral negotiation—that some mutually beneficial trades may not occur—is due to the asymmetric information. DISCUSSION Microeconomics is a field in economics that studies the individual behavior of modern households and firms and how they make decisions to allocate resources. Microeconomics seeks to examine how decisions made and behavior patterns affect demand and supply of goods and services. Demand and supply are the fundamental concepts of microeconomics this is because firms determine what, how and how much to produce, while households decide what and how much to consume. Demand is defined as the willingness of the customer to buy a product at a particular price and the law of demand states that the higher the price, the lower the demand and the lower the price, the higher the demand. Demand is an economic phenomenon that states demand reflects what households are willing and able to pay for and it is ready to buy different amounts of good at different prices. There are two types of goods; the normal goods that obey the law of demand that states the higher the price the lower the demand and the lower the price the higher the demand. Secondly, is the given goods, and these are goods that do not obey the law of demand and whose demand curve flows on the opposite direction. The demand for given goods is higher when the price is higher and lower when the price of the good is lowered. Microeconomics involves observing the behavior of an economy to understand how to distribute resources. This study is very important in business world because it influences supply and demand of goods and services, which are used to set the cost of products and services. Both buyers and sellers use the two elements to make financial decisions. Supply and demand are perceived to be the most influential factors concerning the cost of goods and services. This means that if the demand of a given commodity is high and the supply of that commodity is not adequate to meet the market needs, then the cost of that item will rise. This can be worse if there is only one sole supplier because he/she will be overwhelmed by the increase in demand. Microeconomics can also be used when one intends to establish a business by evaluating supply and demand. By observing the environment, it is easy to spot an opportunity that is yet to be exploited. This involves identifying the needs of the people around you to determine what items you can sell to them. Going blindly will cause a noble idea to fail. Microeconomics is not just learned for passing exams, but because we need its insight in our day-to- day lives. This implies that consumers, sellers, and the public should make decisions that are based on what they know. As the business world evolves, so do consumer habits and tastes. Customer behavior is the most vital component to crafting a great marketing campaign. However, customers are only human, and their behavior can be erratic and unpredictable. What might look like a great marketing approach in a meeting room can therefore be far less effective in practice. Knowing the trends in consumer behavior before they become apparent can give a business an unprecedented advantage over its competitors. Here are 15 trends in consumer behavior according to Forbes Business Council. 1. Increased Demand for Transparency There is an increasing customer demand around transparency. Big corporations have abused the trust of the customer for a long time. We've seen many scandals within various industries from food to automotive. That's the reason why the customers of today require transparency on the supply chain, ingredients, and processes and so on. 2. Accelerated Online Buying Customers will accelerate buying online and using home delivery. This was already happening, but the pandemic revealed to skeptics that it’s easy, it works and it makes their life easier. All businesses will need to have an online strategy or they’re going to get beaten by their competitors that embrace and execute an online sale and marketing strategy. 3. Increased Focus on What's Truly Important I think that Covid has taught us all how to better value and prioritize what's important in our lives. This will change the products and services we decide to purchase the types of products and services we buy and how we actually affect that purchase. 4. A Shift in Omnipresent Communication There will be a definite shift in omnipresent communication. As organizations move online and remotely, creating a cohesive brand experience is not only desired but also expected. Customers are looking for an experience that meets them where they are, when it's convenient. 5. A Greater Human Element in Client Interactions Customers will expect a greater “human” element in their interactions. Virtual meetings and the absence of gatherings has people eager for real-time, meaningful conversations. To a Zoom-fatigued population, a phone call can seem more personal and relaxed. 6. B2B Customers Gaining More Leverage Business-to-business customers will continue to have more and more leverage with tech vendors from checking authentic reviews to managing the sales cycle on their timeline and even benefiting from group buying pricing. Buying is changing for B2B and it's a blessing. 7. Increased Demand for Anonymity Customers will demand more anonymity. Given continued data breaches combined with recent politicization of electronic and social media footprints of private citizens, a new trend will emerge where assurances of security will no longer suffice. Companies will need to accommodate customers who will simply refuse to provide any information beyond what is needed for a particular transaction. 8. Consumers Looking For Social Experiences Once the vaccine reaches the masses and the weather breaks, we are going to see a wave of consumers wanting to go out and shop. Beyond making purchases, consumers are going to want an experience and to socialize. The demand for interaction with others will never be higher and there will be an opportunity for brands to capitalize on this consumer behavior that we hope to see in the near future. 9. More People Taking A DIY Approach We expect to see more people leaning toward trying to do more things themselves instead of looking for others to do them. This can include more cooking at home, less dining out, more attempts at doing one's own nails or styling one's own hair, fewer salon visits, more at-home workouts and less gym time. 10. Growing Importance of Content Marketing As conferences and trade shows put their events on hold in 2021, more businesses will search for alternative ways to sell their products and services. Businesses will turn to the media to try to introduce their products to consumers and enterprise. The successful ones will find ways to sell online. 11. Increased Focus on Green Products Clean energy has already been a trend but this year it will grow exponentially because we've evidently seen the damage we have brought to the planet. As consumers demand more green products, suppliers will produce more, pushing the demand further. 12. More Socially Conscious Shopping Higher degrees of socially conscious shopping are a behavioral trend to watch for in 2021. Love it or hate it, cancel culture as a phenomenon is not new to the world of commerce. However, with tensions high, customers will heavily consider the political, social and ethical ramifications of supporting businesses or brands that are not aligned with their philosophies and beliefs. 13. Increased Value-Based Spending Increased value-based spending (e.g., purchasing locally and buying from brands that align with personal values) is a trend to watch. Before buying from your brand, customers will continue wanting to see brands be a leader for change within different industries and communities and take action on the social issues they care about. 14. A Boom in Customer Automated Decisions 2021 will see a boom in customer automated decisions in both the business-toconsumer and the business-to-business markets. Customers have learned that they can set their software to make decisions based on preferences and trends. 15. Customers Preferring Vetted Vendors Customers are going to be more cautious in how they join with vendors for a number of reasons. With continued data breaches, more customers will want to make sure they are working with vetted vendors. This will also be done for quality—with a slowdown in all industries, customers will be looking for better quality and standards instead of rushing in for the lowest costs. CONCLUSION The supply and demand concept in a liberalized market freely flows until the market equilibrium is achieved. P rice or quantity advantage does cause a disequilibrium causing shortages or surplus. This can be solved through increasing quantity supplied by increasing the price of the market level, or reducing quantity supplied by reducing the price of the market level. With the help of microeconomics, the market can be studied and stabilized accordingly. Moreover, microeconomics can be employed in business management to dictate when an individual should enter or exit a venture. This is because if a business is not bringing any profits there is no point of operating it because it will continue to draw money from the investor instead of generating income. This is very common during recession periods. Understanding consumer behavior is essential for a company to find success for its current products as well as new product launches. Every consumer has a different thought process and attitude towards buying a particular product. If a company fails to understand the reaction of a consumer towards a product, there are high chances of product failure. Consumer behavior analysis has emerged as an important tool to understand your customers. By looking into consumer psychology and the forces behind customer buying behavior, companies can craft new products, marketing campaigns and increase profitability. Companies should talk to consumers, watch out for frustrations, and most importantly, identify their needs and expectations! 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