microeconomics informationmicroeconomics and importance of gold CLICK HEREStudying the economy especially micro economy related issues is the study of families, firms, households etc. and their decisions basically about what to buy when to buy it and how much they should buy of it. Basically when we study this we focus on unemployment, inflation, growth, and other factors on the wealth of a country of group. The only time people buy things is when they think that for whatever reason they will be in a better situation or better off than if they didn't buy it and saved the money. Prices are determined by supply and demand for a given item or service. monopoly companies The greater the demand the higher the price. The more the supply the less the price and demand. The idea of supply and demand though applies better when there is perfect competition. When monopolies or cartels come into play, supply and demand can become skewed. For instance pretend a cartel formed over all food and grocery items. They could all raise the prices together thus keeping more profits that people would have to pay for since it's a bodily requirement to eat. They could raise prices and there would be little change in the DEMAND for the items they were selling in the economy. How do these apply to investing in stocks for smart investing?All these principals play a role in the market because you need to be aware of what's happening currently in the economy and microeconomics. You will then know what to buy as a stock investment and how to make a current market strategy. In microeconomics business will do things based on their competition. If there is a lot of competition prices will be lower. One thing that you should think about as a smart investor is what companies currently have the POWER to raise prices at least to a large degree to increase profits without serious penalty? market for beginnersInvesting in the stock market is like making bets. You want to make bets on companies that have the ability to change things the most especially prices without losing their customer base. I can think of many companies like these. Oil companies, Large retailers, video games stores etc.. Many stores that sell items of ADDICTION also have this ability. For instance tobacco companies can probably raise the price of their products and still keep a good customer base. |