The COVID-19 pandemic unveiled how closely intertwined the world’s economies, businesses and customers truly are. While today’s economy is thriving — fueled by stronger spending on events, according to CNN — the stressful memories of the pandemic remain fresh. In anticipation of another global setback, companies everywhere are actively courting finance professionals who bring microeconomic knowledge to the boardroom table.
Pursuing a career in finance leads to dozens of potential opportunities and roles, including financial manager, banker or analyst. But, according to data from Salary.com, pursuing any career in finance will often put you on the fast track to earning a six-figure income.
Regardless of your career path, Avila University’s online Master in Business Administration (MBA) with a concentration in Finance program can help you master the core financial and economic concepts crucial for successful decision-making in the real world.
What Is Microeconomics?
Microeconomics is the study of how businesses and individuals make decisions regarding the allocation of resources, per the Corporate Finance Institute. By studying microeconomics, you learn how people (consumers) will respond to changes businesses make regarding prices, incentives, resources or production methods.
Companies of all sizes must make difficult decisions every day regarding their operations. In most cases, the biggest issue is that businesses have no idea how consumers will react to their decisions. Modern microeconomic theory says consumers will always make “rational” choices that maximize their economic well-being, but business leaders still need to understand what those choices will be.
For example, let’s say Apple is contemplating slashing the price of its newest iPhone by 20%. This decision poses several important microeconomic questions:
- Will this discounted price fuel higher sales?
- Will these new sales improve revenue and compensate for the discounted price?
- Will cutting the price warp consumers’ perception of the product?
- Will the price reduction create the perception that the new iPhone is lower quality, leading to fewer sales?
- Would Apple be better off keeping prices the same or raising them?
Questions like these incentivize companies worldwide to hire financial professionals. No crystal ball can predict how consumers will respond to a given decision, so the next best alternative is to hire a professional who understands microeconomics.
Pursuing a Career as an Economist
Professionals looking to enter the field of microeconomics will be interested to hear that there is always a need for economic analysts. The U.S. Bureau of Labor Statistics (BLS) reports that available economist positions will grow by 6% by 2032, faster than the average of all occupations. These professionals earn a median annual salary of $113,940, reflecting their value to employers. There is always a need for microeconomists who can create accurate economic reports with minimal errors.
That said, understanding microeconomics does not mean you need to pursue a career as an economist. Career options in finance are abundant, allowing you to specialize within verticals that interest you.
Leveraging Microeconomics
The corporate world relies heavily on microeconomic data when making decisions. In addition to the basic principles of supply and demand, there are four key concepts that all finance professionals should know:
- Theory of consumer demand: Changes in the quantity of a good or service demanded by consumers affect its price in the market.
- Theory of production input value: The price of any product stems from the number of resources spent to create it.
- Production theory: Businesses apply processes to decide on the quantity of raw materials needed for the quantity of items they want to produce and sell.
- Opportunity cost: Consumers weigh the value of the next best alternative when making spending decisions.
Rising professionals will learn these concepts if they enroll in Avila University’s online MBA in Finance program. In particular, this program offers a course on Applied Microeconomics, designed to enhance students’ knowledge of microeconomic theory so they can make sound management decisions using both traditional and behavioral economic concepts.
Through Avila University’s program, students can expect to develop financial acumen through in-depth studies of financial markets, financial risk management, statistical analysis and more. This program is both affordable and highly accessible, as students can complete it fully online in as few as 12 months.
Learn more about Avila University’s online Master of Business Administration with a concentration in Finance program.
