Economics 101 and 102
10 Important Pieces of Information to Know -In No Real Order
1. What is Economics?
The real definition or concept of economics is important to know because in order to have a true understanding of economics, you need to get past the one word association of "money". You need to understand that economics is just as equally about the behavior of consumers and producers as it is the physical payment aspect.
2. Our whole system of Economy pushes limits
The idea of limits and that our whole basis of economy pushes towards these limits is extremely important to know. It allows us to focus on reduction of over consumption and how to reduce usage of resources in general, but in order to do so, we need to know WHY we are trying to reduce them.
3. Government role in Market Economics
A big idea of market run economies is that the government can participate in, and help along, market economies, but cannot exercise power over them. This means that the government has a limited extent to which it can control the negative effects of such economies. Because of this, it is important to realize that the only true entities that have control in limiting such negative effects are the big companies that run it, and the consumers; in other words, you!
4. Understanding Microeconomics and Macroeconomics
The importance of understanding both microeconomics and macroeconomics is really so that you can eventually learn how they both influence each other. Obviously, the play into one another in how they work and their effects. The small makes up the big, while the big continues to influence the small.
5. Knowing the Business Cycle
In knowing the natural business cycle that has been created by our economy, we can learn to brace for recession and embrace peaks in our economy, allowing us to minimize damage from troughs and maximize benefits from the high-points.
6. Market Equilibrium
It's important to understand Market Equilibrium so you can truly understand how interdependent the producer and consumers are with each other. If a producer is even slightly off in their market predictions, their can be a shortage or overproduction of a good. the consumers are heavily relied on by the producers to buy, while the producers are relied on by the consumers to make. Knowing how each one affects the other allows for a deeper understanding in pricing and real life economics.
7. Law of Demand
The Law of Demand is important to know because it works toward the deeper understanding of Market Equilibrium. It is one of the fundamental aspects of the economy, and as a consumer, can affect you on a personal level.
8. Law of Supply
Knowing the Law of Supply in detail allows one to relate it to other aspects of economics. Using the Law of Supply, going into greater depth and understanding the inter-relatedness of economics, you can achieve a greater breadth of knowledge in the markets of any item you wish, just by observing prices.
9. Knowing how the factors of production are related
To understand economics and how it affects you, you need to understand the factors of production. To do this, you need to understand how all of the factors of production come into play in forming the the machine that is varyingly oiled we know as the economic system. From there, you can begin to relate these own ideas to your own financial life.
10. The Circular Flow Model
The circular flow model relates those large-scale, mega corporations to the individual consumers. It helps to help you understand how the money is recycled within the nation, fueling the seemingly infinite but ultimately finite economy.