Naked Econ
The Power of Markets: Who feeds Paris?
Two basic assumptions that economists make about individual and firms are that all individuals act in a way to make themselves as well- off as possible. For example, individuals make the best use of their utility and skill, so they can earn more money. The second assumption is that firms always try to maximize the money they earn. For example, if an entrepreneur had two business choices that he could make, he would pick the business choice that he thinks would be more profitable to him. Price is also very significant in the market economy. If there is less of a product, but more people demanding it, then, of course, the price will rise. If there is more of a product but less people demanding it, then, of course, the price will fall. Also, products, like gas, can alternate the economy tremendously. If the price of gas is high, then people will look for alternatives, such as electric cars, bikes, trains, buses, and smaller, more efficient cars. There will be more people demanding these alternative products and less people demanding gas, bigger cars, etc. Then, the gas price will fall and more people will start to use bigger cars, less bikes, less bus and train rides, and in turn, the prices of those alternatives to gas will fall as well. It is a pattern.
Incentives Matter: Why you might be able to save your face by cutting off your nose (if you are a black rhinoceros)
Incentives matter because individuals are driven by it. For example, if we are paid based on how well we work, then we would work harder. It is based on the individuals’ interests. Many teachers say they are underpaid. All teachers’ wages are the same, whether they are terrible at their job or excellent at it. But people who are excellent at teaching and have good educational skills will probably look for better job offers because of the low pay of teachers. Unless they love it so much, they have to do it, then most will go find better pay. So
Two basic assumptions that economists make about individual and firms are that all individuals act in a way to make themselves as well- off as possible. For example, individuals make the best use of their utility and skill, so they can earn more money. The second assumption is that firms always try to maximize the money they earn. For example, if an entrepreneur had two business choices that he could make, he would pick the business choice that he thinks would be more profitable to him. Price is also very significant in the market economy. If there is less of a product, but more people demanding it, then, of course, the price will rise. If there is more of a product but less people demanding it, then, of course, the price will fall. Also, products, like gas, can alternate the economy tremendously. If the price of gas is high, then people will look for alternatives, such as electric cars, bikes, trains, buses, and smaller, more efficient cars. There will be more people demanding these alternative products and less people demanding gas, bigger cars, etc. Then, the gas price will fall and more people will start to use bigger cars, less bikes, less bus and train rides, and in turn, the prices of those alternatives to gas will fall as well. It is a pattern.
Incentives Matter: Why you might be able to save your face by cutting off your nose (if you are a black rhinoceros)
Incentives matter because individuals are driven by it. For example, if we are paid based on how well we work, then we would work harder. It is based on the individuals’ interests. Many teachers say they are underpaid. All teachers’ wages are the same, whether they are terrible at their job or excellent at it. But people who are excellent at teaching and have good educational skills will probably look for better job offers because of the low pay of teachers. Unless they love it so much, they have to do it, then most will go find better pay. So