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Essay / Research Paper Abstract
This 3-page paper discusses the concept of allocations and microeconomics, by using a bicycle shop as an example. Bibliography lists 1 source.
Page Count:
3 pages (~225 words per page)
File: D0_MTmicrallo.rtf
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Unformatted sample text from the term paper:
resources are going to be spent. Within this study, microeconomics examines the basic theories of supply and demand, and how individual businesses determine how much of a good to produce
and how much to charge for it (Investopedia, 2009). Also involved in microeconomics (on the consumer side) are allocation decisions, such as how much to spend on a good. On
the business end, the trade-offs for business include what goods are to be produced, how theyre produced and who gets them. For this particular study, well focus on a small
town that is pedestrian- and bicycle-friendly. In this town is a bike shop that makes its own bicycles. Now, one can assume that because this town has many bike and
walking paths, and everyone is environmentally-minded, that bikes would be an easy sell - and all 6,000 people in this town would want to buy one. But thats not necessarily
the case. To ensure that all the towns population gets a bicycle, the shop would have to price them so low, it wouldnt realize any profit (and it would go
out of business). What, then, are the tradeoffs in terms of supply and demand? Lets examine this. Well assume that the bike shop launched this particular business because there was
a demand, and need, for quality bikes. Again, given the nature of the town, this is a safe assumption. So in the beginning, demand spikes, it rises quickly as people
find the bikes, try them, like them, and tell their friends. Our bike shop sells out of bikes and is backordered as more and more people want these amazing bicycles.
But as demand becomes satisfied, fewer bikes are produced. The bike shop might have a lot of inventory sitting in its shop because demand has dropped. In this regard, the
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