Economics 101
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Young Adult (18-35)Accents
North American (General)Transcript
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Economics 101 by Alfred Mill. Chapter one. What is Economics taking the dismal out of the dismal science? You open the door to your fridge and gaze on the food inside and you declare there's nothing to eat in this house. Later, you walk into a closet full of clothes and think I have nothing to wear. You're faced with scarcity, you've never had enough of what you need or want. The fact is you have plenty to eat and many clothes to wear. You ignore the options you faced and then but eventually, you know, you will relent and eat the apple next to the shriveled grapes at the bottom of the bin, put on the shirt and pants that you hate. And you're a creature of economics. Given scarcity, you look at the choices you face evaluate and then choose studying scarcity. Economics is the study of how individuals, institutions and society chose to deal with the condition of scarcity. It is fascinating to see how people will react to scarcity. Some create complex plans and systems to make sure that everyone gets their fair share of those scarce resources. Others make things up as they go along. Everybody practices economics on a daily basis, from a single individual to the largest society on earth. People are constantly engaged in the struggle to survive. Make ends meet and even thrive given the relative scarcity they face the child of philosophy, Economics has been around for a long time though, it has not always been known by that name. Philosophers have studied scarcity and choice long before the field was so named the father of modern economics, Adam Smith was considered a moral philosopher, not an economist. The people who study these choices are economists. The field of economics is huge because people have an immense range of choices. Some economists study the decision making of individuals and institutions. Others study how nations handle scarcity. Economists developed theories to explain the behavior of whatever it is. They're studying some of these theories are then tested against real world data, and sometimes these theories are put into practice without ever being tested. Economists worked for universities, financial institutions, major corporations and governments microeconomics. The field of micro economics focuses its attention on the decision making of individuals and businesses. Microeconomics is primarily concerned with markets for goods, services and resources. Markets are central to understanding micro economics whenever and wherever buyers and sellers come together to exchange resources, goods or services? A market is created. The behavior of these markets is of particular interest to economists. Are they functioning efficiently? Do participants have access to adequate information? Who and how many participate in the market? How did the decisions made in one market impact? The decisions in a related market, macro economics, macroeconomics is the study of how entire nations deal with scarcity, macroeconomics, analyze the system. Nations create or allow for the allocation of goods and services. The questions they ask are varied and of great interest to individuals and policymakers alike. How do you measure the economy? Why does unemployment exist? How do changes in the amount of money affect the entire economy? What impact does government spending or tax policy have on the economy? How can you make the economy grow scarcity without scarcity? There would be no need for the study of economics for that matter. If scarcity did not exist, there would be no need for this book. You're not that lucky. However, scarcity is the universal condition that exists because there is not enough time money or stuff to satisfy everyone's needs or wants. The stuff that everyone wants is made from resources in an effort to make economic sound more economic. E resources are referred to as the factors of production. The factors of production include land, labor, capital and entrepreneurship. Is there really scarcity in America? A land of plenty scarcity exists for everyone from rich to poor. All face the condition, scarcity in America looks different from scarcity and Somalia, to be sure here there's plenty of food and clean water, but in Somalia both are lacking scarcity isn't just a function of limited resources but also of unlimited wants and that is something Both America and Somalia share land is inclusive of all natural resources and not just some random piece of property, trees, mineral deposits, fish in the ocean, groundwater and plain old land are all included. Land can be divided into renewable and non renewable natural resources, renewable resources like pine trees and chickens are easily replenished. Non renewable resources like oil and atlantic cod are difficult to replenish. The payment for land is referred to as rent. Labor refers to people with their skills and abilities. Labor is divided into unskilled, skilled and professional unskilled labor refers to people without formal training who are paid wages to do repetitive tasks like make hamburgers or perform assembly line production, skilled labor refers to people paid wages for what they know and what they can do. Welders, electricians, plumbers, mechanics and carpenters are examples of skilled laborers. Professional laborers are paid wages for what they know. Doctors, lawyers, engineers, scientists and even teachers are included in this category. Capital in economics does not refer to as money, but to all of the tools, factories and equipment used in the production process. Capital is the product of investment stop. Isn't that confusing? Up until now, you've probably lived a happy life thinking that capital was money and then investing is what you do in the stock market. Well, sorry, capitalist, physical stuff used to make other stuff and investment is the money spent on buying that stuff To make capital, you have to have capital because capital is always purchased with borrowed money. It occurs an interest payment. Money talks allocation, economists describe getting the right resources to the right people as allocation allocated efficiency occurs when a marginal benefit equals marginal cost. When this condition is met the greatest benefit accrues to society