Author: Economics Professor

Economics: Opportunity Cost

We have already talked about the definition of economics, about macroeconomics and microeconomics, about the laws of supply and demand, and how they work together. Now, let’s look at another basic economic idea: Opportunity Cost. Opportunity Cost means this: if we want to buy something or spend time on something, then it means that there is something else that we are not buying or spending time on. Confusing? Let’s look at an example. Say a student is trying to decide between buying a chocolate bar and a milkshake. He only has money enough to buy one of them. If he...

Economics: The Law of Supply and Demand

We have already talked about the Law of Supply, and the Law of Demand. Now, let us put them together and look at this basic law of economics, the Law of Supply and Demand. Now, first, let us review the Law of Demand. The Law of Demand says, the more expensive something is, the less people will buy it. Also, the more people want something, the more expensive it will get. For the Law of Supply, it says that the more expensive something is, the more people will sell it. On the other hand, the more sellers there are, the...

Economics: The Law of Supply

We already talked about the Law of Demand. Now, we are going to talk about the Law of Supply. But first, let us review a term that we learned about when we discussed the Law of Demand. That term is ceteris paribus, or “all things being equal.” When we talk about a law in economics, and about how that law works, we always assume that there is nothing else outside the law that changes it. This is the starting point of understanding economics. For the Law of Supply, it is almost the reverse of the Law of Demand. Remember, in...

Economics: The Law of Demand

Now that we’ve talked about economics, microeconomics, and macroeconomics, let’s talk about the Law of Demand. Since we are talking about laws, we have to talk about this new term that you will see every time you read about economics. It is ceteris paribus. It means, “all things being equal.” Like in sports, the field has to be as separated as possible from the watchers. Baseball players would find it very hard to play a good game with the watchers running around the field. Everything is ceteris paribus in the baseball field because nothing else is happening inside the field...

What is Economics?

“Economics” is such a big word that it is hard to believe that it can be understood. First, we will look at the explanation of economics. Next, we will break each word down so we can understand it. After that, we will put all the words together and come up with a definition that we can all understand. First, economics is the efficient allocation of scarce resources. Don’t panic; we’ll break it down. Efficient. Efficiency is when you get the most done in the least amount of time. For example, being efficient with homework means that you finish all the...