Economic principles: Microeconomic Variables

Microeconomic Variables
Name
Institution/ Affiliation
Microeconomic variables
The manufacturing industry plays a vital role in the transformation of goods and materials into new products. It comprises setups involved in the mechanical, physical, or chemical conversion of materials, substances, or components into new products. According to North America Industry Classification System (2020), the manufacturing industry covers 18 setups such as leather industry, tobacco products, textile products, apparel, and other products, furniture and fixtures, chemicals, and allied industries, to name a few.
Moreover, setups in the manufacturing sector are mostly referred to as plants, factories, or mills and characteristically use power-driven machines and material handling equipment. Nonetheless, setups that convert materials or substances into first-hand products by hand or in the operative's home and those involved in selling to the common public products made on the same locations from which they are sold, for example, bakeries, chocolate stores, and routine tailors, may also be comprised in this sector.
The manufacturing industry plays a vital role in the development and growth of any nation across the world. In reality, manufacturing drives the productivity and innovation of any country. Research shows that manufacturing industries contribute to over 17% of the gross domestic product (Manyika et al., 2012). The industry has also reduced the unemployment rates significantly as well as poverty levels. For instance, in the United States, over 15.09 million people are employed in the manufacturing industry. Besides, the manufacturing industry has supported the growth of other auxiliary sectors such as agriculture (Manyika et al., 2012). Today, through technological advancements, the manufacturing industry has helped in the modernization of agricultural products such as farming tools and machines, chemicals that are essential in farming.
Multiple microeconomic variables may affect the manufacturing industry. First, the demand and supply of raw materials and labor significantly affect the manufacturing industry. It is a fundamental principle of economics as the demand for products increases, the prices of the products rise. Raw materials and labor are essential products in the production process. With the global trends in the manufacturing industry, the demand for raw materials has led to higher prices of raw materials.