lb:basic.economics
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| lb:basic.economics [2025-11-01 12:52:40] – created ninjasr | lb:basic.economics [2025-12-29 18:42:21] (current) – Minor formatting changes. ninjasr | ||
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| ====== Basic Economics ====== | ====== Basic Economics ====== | ||
| - | This article explains the basics of economics. As in: the market, pricing, stuff like that. | + | This article explains the basics of [[lb:economics]]. As in: the market, pricing, stuff like that. |
| {{tag> | {{tag> | ||
| ===== Notes ===== | ===== Notes ===== | ||
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| It's also a bit ramble-y, which I'll fix eventually I swear. | It's also a bit ramble-y, which I'll fix eventually I swear. | ||
| + | |||
| + | I //am// planning to make another article on currency, but when that' | ||
| ===== Supply & Demand ===== | ===== Supply & Demand ===== | ||
| - | The absolute basics of all economics starts with **Supply** & **Demand**. If you do not understand these fundamentals, | + | The absolute basics of all economics starts with <dfn>Supply</ |
| Supply & Demand are less of a strictly economic law and more of a //law of nature// that manifests in the economy. | Supply & Demand are less of a strictly economic law and more of a //law of nature// that manifests in the economy. | ||
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| What's a bit more complicated – and what needs to be grasped – is // | What's a bit more complicated – and what needs to be grasped – is // | ||
| Supply & Demand want to exist in a state of equilibrium. This is the ideal state where the supply perfectly matches the demand for it. That state is also difficult to reach.\\ | Supply & Demand want to exist in a state of equilibrium. This is the ideal state where the supply perfectly matches the demand for it. That state is also difficult to reach.\\ | ||
| - | If they are not in a state of equilibrium, | + | If they are not in a state of equilibrium, |
| - | At this point, ‘value’ is represented in **price** which is expressed in a given **currency**, though neither of those are technically required for understanding how supply & demand works. | + | At this point, ‘value’ is represented in <dfn>price</ |
| If the demand is higher than the supply, then the price of the supply increases. By increasing the price, the demand lowers because those demanding it are gradually less willing to obtain the supply.\\ | If the demand is higher than the supply, then the price of the supply increases. By increasing the price, the demand lowers because those demanding it are gradually less willing to obtain the supply.\\ | ||
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| Technically – and I know this might be controversial – you might not even necessarily need to know how to count to understand the economy. This is because all the numbers and prices and whatnot are just ways of making it easier to picture Supply & Demand in action. If you understand it intuitively, | Technically – and I know this might be controversial – you might not even necessarily need to know how to count to understand the economy. This is because all the numbers and prices and whatnot are just ways of making it easier to picture Supply & Demand in action. If you understand it intuitively, | ||
| ===== Money ===== | ===== Money ===== | ||
| - | Money is just a representation of ‘value’. It's a bit more complicated than that though, but I'm gonna keep the explanation brief. | + | <dfn>Money</ |
| We represent ‘value’ in money because, for the purposes of trade, it's convenient. That's it.\\ | We represent ‘value’ in money because, for the purposes of trade, it's convenient. That's it.\\ | ||
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| The reason some guy paid $1.50 while you paid $2.00 is because those are the prices that we had agreed upon. He was willing to pay $1.50 for the hotdog and I agreed to sell it to him for that amount. Meanwhile you were willing to pay $2.00 for it, so I agreed to that too. If you had known the other guy had paid less, you'd probably want to pay that much too.\\ | The reason some guy paid $1.50 while you paid $2.00 is because those are the prices that we had agreed upon. He was willing to pay $1.50 for the hotdog and I agreed to sell it to him for that amount. Meanwhile you were willing to pay $2.00 for it, so I agreed to that too. If you had known the other guy had paid less, you'd probably want to pay that much too.\\ | ||
| Basically every price of any good or service is individually negotiable like this. There //are// parts of this ‘equation’ that are //kinda, sorta, not really// set in stone – like me spending $0.50 to make each hotdog – but generally this applies.\\ | Basically every price of any good or service is individually negotiable like this. There //are// parts of this ‘equation’ that are //kinda, sorta, not really// set in stone – like me spending $0.50 to make each hotdog – but generally this applies.\\ | ||
| - | Does this mean that all prices are nonsense and, in fact, nothing is worth anything? No, that doesn' | + | Does this mean that all prices are nonsense and, in fact, nothing is worth anything? No, it doesn' |
| So you aren't paying $2.00 because //every hotdog in existence is worth exactly $2.00// but because within your given context, that's how much the hotdog was worth //to you//. | So you aren't paying $2.00 because //every hotdog in existence is worth exactly $2.00// but because within your given context, that's how much the hotdog was worth //to you//. | ||
lb/basic.economics.1762001560.txt.gz · Last modified: 2025-11-01 12:52:40 by ninjasr