Monthly Archive: October 2015

You’ve probably heard your parents complain about the price of gas going up, or how expensive milk is becoming, or about rent and tuition fees and all those other grown-up things. Economics also explains why prices go up, and most importantly, it explains how they go up. Review: Supply and Demand Since the supply and demand graphs are part of every basic economics concept, let us go back to them and review how they change prices. Remember: the higher the supply, the lower the price. The higher the demand, the higher the price. Both the suppliers and the demanders need...

So far, we have only been talking about what economics is like for one country, or one nation, or one kind of good. But obviously, there many people, many countries, and many goods being bought and sold. We are going to talk about one of the laws of economics that applies to several people or countries, and several goods, at once: the Law of Comparative Advantage. The Law of Comparative Advantage says that each nation should produce, or each person bring, whatever good is cheapest for them to bring. Why? Because each nation, and each person, is trying to practice...

Now that we have talked about the Law of Supply and Demand, we can talk about Equilibrium. First, let us review the Laws of Demand and Supply, and then the single Law of Supply and Demand. The Law of Demand says two things. First, the cheaper something is, the more people will want to buy it. Second, the more people want to buy something, the more expensive it will become. On the other hand, the Law of Supply says two things. First, the more expensive something is, the more people will want to sell it. Second, the more people are...