Economics theories are used almost everytime in our life since it is the study of how to manage our scarce resources. So what is an Economy? Economy is the area in which people make, or produce, goods and services. Economics is divided into two parts which is microeconomy which includes the role of government, producers, demand and supply, markets, etc and macroeconomy which includes inflation, growth, unemployment, etc. In this short post, I will cover some of the basics of economy which includes Scarcity, Opportunity cost, free market and planned economy.
Economics have one main problem which is scarcity. Economic scarcity is the concept that there is only so much of anything. It is economic scarcity that gives rise to society's attempts to assign value to whatever is limited. Ask yourself a few simple questions: Would you like more clothes? would you like more money to buy more goods and services? For most people, the answer to these question is yes. People always want more, no matter how much you already have. This shows how human wants are unlimited. We contrast this to the limited resources we have to satisfy this wants. Only a limited number of resources can be used to satisfy these wants, since we only have this much natural or human resources. Hence, scarcity is clear that it is caused by the unlimited amount of wants but yet the resources that is used to satisfy these wants are limited.
From the above economic problems, comes about choice and opportunity cost. Since there is a limited resources and human wants are unlimited, choice is very important for people since they have to choose which wants they want to satisfy. Choice is necessary because resources can be used to produce other goods and services. From this, opportunity cost apply. Opportunity cost is the next best alternative foregone, it is the key concept in economics because it implies on the choice between two desireable results. It also plays a big part as it make sure that the limited resources are used efficiently. For example, if a city wants to build a school on an empty land, the opportunity couse will be the funds in building the school and the land itself to build other buildings. But opportunity cost also apply in terms of anything that has value.
Next, a producer have three very important question before they create goods and services to satisfy people's wants. 1.What to produce?, one problem is deciding exactly what goods and services to make since there is limited resources. This involves choosing which wants to satisfy. 2.Whom to produce for?, not every person's wants can be satisfied due to limited resources. 3.How to produce? These answers depends on the type of economy the producers are doing. If it is a planned economy, The government decides what, how and for whom to produce since they are the ones who controls the economy. If it is a Market economy, the people decide what, how, and for whom to produce. If the demand for a certain product is high, producers will know how to tackle the three questions and obtain a profit.
These are a few basic things about economy. Although they are basic concepts, it haves a very important aspects towards economy. Every economy faces the same problems, which is economic scarcity. But here comes a choice and opportunity cost to efficiently use this limited resources. From here producers, will need to choose how to satisfy these people's wants either from market economy or planned economy.
Desmond Kandiawan :D
5y
Economics have one main problem which is scarcity. Economic scarcity is the concept that there is only so much of anything. It is economic scarcity that gives rise to society's attempts to assign value to whatever is limited. Ask yourself a few simple questions: Would you like more clothes? would you like more money to buy more goods and services? For most people, the answer to these question is yes. People always want more, no matter how much you already have. This shows how human wants are unlimited. We contrast this to the limited resources we have to satisfy this wants. Only a limited number of resources can be used to satisfy these wants, since we only have this much natural or human resources. Hence, scarcity is clear that it is caused by the unlimited amount of wants but yet the resources that is used to satisfy these wants are limited.
From the above economic problems, comes about choice and opportunity cost. Since there is a limited resources and human wants are unlimited, choice is very important for people since they have to choose which wants they want to satisfy. Choice is necessary because resources can be used to produce other goods and services. From this, opportunity cost apply. Opportunity cost is the next best alternative foregone, it is the key concept in economics because it implies on the choice between two desireable results. It also plays a big part as it make sure that the limited resources are used efficiently. For example, if a city wants to build a school on an empty land, the opportunity couse will be the funds in building the school and the land itself to build other buildings. But opportunity cost also apply in terms of anything that has value.
Next, a producer have three very important question before they create goods and services to satisfy people's wants. 1.What to produce?, one problem is deciding exactly what goods and services to make since there is limited resources. This involves choosing which wants to satisfy. 2.Whom to produce for?, not every person's wants can be satisfied due to limited resources. 3.How to produce? These answers depends on the type of economy the producers are doing. If it is a planned economy, The government decides what, how and for whom to produce since they are the ones who controls the economy. If it is a Market economy, the people decide what, how, and for whom to produce. If the demand for a certain product is high, producers will know how to tackle the three questions and obtain a profit.
These are a few basic things about economy. Although they are basic concepts, it haves a very important aspects towards economy. Every economy faces the same problems, which is economic scarcity. But here comes a choice and opportunity cost to efficiently use this limited resources. From here producers, will need to choose how to satisfy these people's wants either from market economy or planned economy.
Desmond Kandiawan :D
5y
A post that was able to put together some economics concepts in a succinct way. So what are some conundrums that you have faced and what are the times when you did apply economic thinking? Would love to have you share!
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