are several key microeconomic and macroeconomic factors that have a heavy influence on the price and output of ‘Phenomen’Eyes.’ In the course of this paper these factors will be further explored and explained. The factors that affect the individual will be looked upon under microeconomics and can range a time span of less than a year. Where as the factors that affect the entire economy and will last five years or more will be looked over under macroeconomics (Mankiw, 1998). In short macroeconomic factors are centered on things which affect the nation i.e. inflation, interest rate, unemployment, exports and imports, where as microeconomic factors consist of those that affect people on an individual level e.g., personal income, preferences, price of competitor products.
To start with, microeconomic analysis aims to take a better look at how individuals and organizations work in any given economy, in our case this would be the economy of Australia. Here we look at the small scale issues and problems related to the decisions of prices and output for the Phenomen’Eyes. Prices here arte based on individuals and how they would act and react to the market and the product. The output is directly linked to the demand that is being targeted. In this case, Givenchy is going after consumers who are interested in high end beauty products. The prices are based on their preferences; these individuals will most likely not be looking to invest in mascara that has a lower price tag on it because they associate money with quality. Similarly, because a relatively small amount of consumers are being targeted their demand will come in small numbers as well, which means that the production will not consist of a large scale massive operation. Demand the production is directly related here, the lower the demand the lower the number of units that will be produced and vice versa. The microeconomic analysis assumes that the consumers are acting with a proper rationale for all their