Economics (from Greek oikonomos, for one who manages the household) is the study of the production, distribution and consumption of goods and services, focusing on the behaviour and interaction of economic agents and economies themselves. It almost always assumes scarcity of some resource or another, although post-scarcity economics could be interesting to think about.
The field of economics is traditionally divided into two broad subfields. Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.
Why study economics? It's a good question, and one I'd like to be able to answer with something better than “it's part of my schoolwork”. I do think that understanding more about the forces and principles at play in these critical systems is useful: expanding my mind, informing decisions. Isn't that the whole point of the MBA?
I'll be studying economics next semester for ECO80001: Economics, using G. Mankiw's Principles of Economics as the text book.
Market Failure Question:
“What factors have lead to market failure and the decline of journalism?” “How has market failure lead to the decline of journalism?” Slides:
intro (Play the clip) The players: news outlets vs web giants advantage: web both comparative and absolute advantage creation of oligopolies and the “walled garden” types of market failure focus on negative externalities externalities - social cost of hypertargetting failure by traditional media to internalize Summary explain the meaning of absolute advantage and comparative advantage see how comparative advantage explains the gains from trade apply the theory of comparative advantage to everyday life and national policy explain what an externality is see why externalities can make market outcomes inefficient examine how people can sometimes solve the problem of externalities on their own consider why private solutions to externalities sometimes do not work
Economists use the term demand to refer to the amount of some good or service consumers are willing and able to purchase at each price. Demand is based on needs and wants – a consumer may be able to differentiate between a need and a want, but from an economist’s perspective, they are the same thing. Demand is also based on ability to pay. If you can’t pay for it, you have no effective demand.
Elasticity is a measure of a variable's sensitivity to a change in another variable. In business and economics, elasticity refers the degree to which individuals, consumers or producers change their demand or the amount supplied in response to price or income changes.
Supply and Demand
Price and elasticity
Average variable cost The cost of production of a good includes “fixed” and “variable” costs. Fixed costs include those costs that do not vary by the number of units produced e.g. factory fitout, shop rental, etc. Variables costs increase with production.
Average total cost (ATC) is the sum of fixed and variable costs divided by units produced.
Marginal cost (MC) is the difference in total cost between two levels, divided by the change in units produced.