St. Mary’s University
Department of Economics
Introduction to Microeconomics
Capstone Brief #1 April 23, 2020
Modeling a Dynamic Economy
What makes up a dynamic economy and
how is it modeled?
Theory
In economics, a dynamic economy model is
the approach taken toward deciding what
exactly should be applied in certain areas of
complex business decisions. A dynamic
theory deals with all included characteristics
of a particular subject and their relation to
each other as well as outer components. The
make-up of a dynamic economy includes
many components, however the four most
important are the income used to initially
purchase, consumer intake, the functions
that the intake provides, and the investment
made to insure future consumption.
individual firm can assess which is
appropriate fiscally to fit the economic
make-up at that point in time. Since a
business’s main goal is to produce the
maximum amount, at the lowest cost
possible it is essential that they take the time
to calculate (and even manipulate) the costs
of any and all input combinations toward a
product or service.
Alongside the collection of data that
concerns production, the cost of goods (and
services) themselves also need to be taken
into consideration when analyzing
maximum efficiency. A very specific and
sensitive topic in this area are employee
conditions and wages. The basic economic
make-up portrays businesses to neglect
maximum benefit on the side of workers.
However, as times have evolved, there is an
