Notesale: Turn your study into money

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NOTE: REMEMBER TO TAKE A BREAK EVERY NOW AND THEN OKAY?

What Is Economics?What Is Economics?

Supply And DemandSupply And Demand

EquilibriumEquilibrium

Substitution EffectSubstitution Effect

Cost And RevenueCost And Revenue

Conclusion

Transforming Abstract Economics Concepts Into Memorable Analogies

If an economics professor were to reveal their deepest, darkest secrets about teaching the subject,
they would probably admit that explaining concepts like supply, demand, and market equilibrium
can be quite challenging
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Anyone who
has ever purchased a product or sold one in return understands these ideas
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The answer is: because they
are abstract concepts! It’s not that these ideas aren’t important or relevant; it’s just that they aren’t
very memorable unless you find ways to visualize them and associate them with something more
concrete
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It explores the ways in which such activities are influenced
by governmental policy and how those policies in turn are shaped by economic analysis
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It is also referred to as “the dismal science” because its conclusions can be very pessimistic
because they assume that individuals are self-serving, profit-maximizing, utility-maximizing, and
utility-maximizing, and utility-maximizing individuals who are often greedy
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Supply And Demand
The supply and demand model is probably the best-known model in all of economics
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The basic idea
behind the model is that as the number of units offered for sale (supply) increases, the price will
decrease, and as the number of units demanded increases, the price will go up
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The more people want a product and the fewer there are available, the
more willing people will be to pay more for it
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The supply and demand model is often
illustrated using a graph that shows the price of a good on the vertical axis and the quantity of the
good on the horizontal axis
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THE ANALOGY
supply and demand is a very important concept
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However, describing it in simple terms can be difficult, especially without any visual aids
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They pile into a school bus and begin their
journey
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One child comes up with a new game he thinks will be fun: he’ll throw all his belongings out
of the bus window and try to catch them when they land outside! The other children laugh at his
radical idea and think he’s being ridiculous, but one child actually does it
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When it lands outside, no one is there to catch it—there’s no one there at all! And that’s
where his issue lies: there’s no one there to catch what he’s thrown out of the window! What was
once in abundance is now gone—his possessions are now rare! As supply and demand theorists
understand, scarcity results from throwing things out of windows—or taking them out of circulation
(by getting rid of them)
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Something that
seems like it would be easy for everyone to obtain may turn scarce if we suddenly try to remove it
from circulation
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In economics, this idea is applied to the market for a
particular good
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If the quantity that people want to buy is larger than the
quantity that people want to sell, then the price will go up, and more people will decide to sell their
product
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Equilibrium is a fundamental concept in economics and is used in many different economic contexts
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If the price of a product goes up, people will want to buy a product that is cheaper
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Cost And Revenue

The cost of a product is the value of the resources that go into producing it
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Conclusion
These concepts may seem difficult to understand, but the truth is that you’ve probably already come
into contact with them at some point in your life
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When you do this, these concepts become a lot more memorable, and you will find it much easier to
understand them

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