The Essentials of Economics

By Kimberly Simpson

The Benefits & Weakness of a Market Economy

Many politicians campaign for or against one of these economies. In the future, I will be a voter responsible for electing a politician who proposes one of these systems. In order to be an informed voter, I must be aware of this information in order to preserve my future and ensure my economic success. A market economy is very beneficial to private businesses, but does not allow for an equal distribution of wealth. It is important to know the benefits and weaknesses of this system, so that I can be aware of my surroundings and follow a career path that will allow me to be successful in a private-business dominated society.

The Benefits & Weakness of a Command Economy

Similarly to above, the benefits of the other type of economy, a command economy, must be known to be financially secure. Command economies allow for a more even distribution of wealth, however, they are inefficient and provide for shortages and surpluses of products. If I own my own company, this may not be personally advancing. Managing prices and reorganizing business would be constant issues. In order to be financially independent, it is important to be aware of the pros and cons of America's and other country's' economic system.

The Symbiotic Relationship Between Producers & Consumers

Producers provide materials and goods for consumers to live, while consumers give money to producers to make more products. This general model exemplifies the importance of an equal number of producers and consumers in an economy. As a producer, consumer or both, it is important for members of the economy to known their role. With this knowledge, you can easily assist in the flourishing of the economy and accumulate more products. Personally, by knowing where materials are coming from and where they are going, I am able to analyze different stores to get the best prices and start my own business in production. These skills are especially in the future, as the population grows while the job market does not it is important to be able to be financially independent and able to start one's own business if necessary.

More than 100,000 chemicals are used in production; not all of them are tested.

As a teenager, I have years of life ahead of me, so the toxic bi-products of production will directly affect me life. Global warming, extinct of animals, ozone depletion and other effects will be more sincere issues in my future. The rising generation must be aware of this information and be able to study it in order to manage the side-effects.

Laws of Supply & Demand

When there is a large quantity of products available, sellers cannot sell as much as they product, therefore, there is a surplus of product so prices must decrease so that all the material can be sold. The opposite is true for a low supply. When there is high demand, all the supplies are bought so there are higher prices. It is important to understand these laws in running a business. With this knowledge sellers are able to set prices and to manipulate markets. Also, economists you study stock markets can use this knowledge. These laws are the basis of economics and are important in all sales jobs.

Productivity & The Business Cycle

In order to run an effective business, one must know how to produce the most products in the shortest amount of time. Productivity relies heavily on technology; as it advances, it becomes more and more important to be up-to-date. As a member of these technological age, I must understand which devices are most effective in order to complete jobs quickly.

Price Floors & Ceilings & Why They Are Necessary

Another important part of running a business is understanding price floors and ceilings. These are minimum and maximum prices for goods often created by the government. Crops, for example, may require one so that one product does not control the markets. If corn were sold very cheap, than many people would purchase it over other products. This would skew the markets as prices rose and fell with demand. It is important to understand what effects prices so that one can get the most for their money when shopping.

The Equilibrium Price & Business

This value, the point where both producers and consumers are satisfied with prices, are able to benefit from the economy. If one knows what this value is, then they can curve the economy in their favor by producing more of less products. By following the laws of supply and demand, either producers or consumers may buy more of less products in hopes of curving the economy. As a consumer, it is important to understand where this value is in order to predict whether prices will rise or fall.

Unemployment Rates

As a consumer, it is important to make money in order to survive. When the economy is not flourishing and unemployment rates are high, one must try to save as much as possible in the case of an emergency. As a future member of the work force, I must also consider that workers with less experience receive jobs after others, so if unemployment rates are low it will be especially difficult for me to receive a job.

Recession & Inflation

Knowledge of recessions can be studied like that of unemployment rates(above). Recessions are periods when GDP (the value of all products) decreases for six months. By studying the GDP people are able to predict when recessions and inflation will occur. This helps them invest money, determine when to save more or less money and buy stocks. All consumers must meet their basic human needs to survive, but with more knowledge of the stock market, comes more money and purchasing or more wants.