Changes in the macro environment affect individual firms and industries through

Question

Changes in the macro environment affect individual firms and industries through the microeconomic factors of demand, production, cost and profitability. Suppose the government change the policy about environmental conservation such as import of cars. Discuss how this policy affects on your business and the economy. Changes in the macro environment affect individual firms and industries through the microeconomic factors of demand, production, cost and profitability. Suppose the government change the policy about environmental conservation such as import of cars. Discuss how this policy affects on your business and the economy.

Explanation / Answer

To conserve the environment, it is possible that the government puts a ban on import of cars which would have microeconomic consequences for the houses who are purchasing cars as they might have to face a higher price for cars in the market because of lesser competition in the market. It might also lead to lesser variety in the market as the imports are banned.

On the production side, it would allow the producers to enjoy the market space and profitability as there are no threats from foreign producers

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