Understand economics from scratch

Chapter 5 If you don't understand economics, you can't understand this era - 10 key terms in the economic world (2)
Just like our housing shortage problem, with the improvement of people's material living standards, our requirements for the quality of housing conditions are getting higher and higher. The expectation is that the house will be both functional and aesthetically pleasing.And this kind of practicability includes requirements such as the size of the housing area, the comfort of the house, and the convenience of the location of the house. In this way, even if the population does not increase, there will be housing pressure, so it is necessary to meet such a large number of people on limited land. The shortage of housing is obvious.This can also explain why we still feel the scarcity of resources in today's highly developed material civilization.

Scarcity is an eternal problem faced by human beings, and it coexists and dies with human society.For example, when the governments of poor countries are arguing over whether to spend their limited fiscal revenue on infrastructure construction or education, the governments of rich countries are also worrying about whether to use their revenue for national defense or social welfare; when the poor worry about three meals a day, the rich Man is considering whether to play bridge or golf.

The concept of scarcity plays a vital role in the entire economic theory. Some economists believe that scarcity is the prerequisite for the existence of economics, so they often use scarcity to define economics.Due to the existence of scarcity, it determines that people continue to make choices in the use of economic goods, such as deciding what to produce with limited resources, how to produce them, for whom to produce them, how to choose between scarce consumer goods and how to use them to satisfy people. The various needs of the economy are considered to be the subject of study in economics.Goods can only be considered part of a society's wealth if they are scarce.

In life, people's desires and needs always exceed the resources that can be used to satisfy their desires, and it is precisely because of the scarcity of resources that causes competition and cooperation.Competition is competition for control of scarce resources, and competition is the way society allocates resources, that is, decides who gets how much of scarce resources.The so-called cooperation is to use scarce resources and work together with others to achieve a common goal.Cooperation is to produce more products with limited resources. Therefore, cooperation is an effective way to solve the scarcity of resources.

Value and Price: Astronomical Barber Fees
A barber shop in Zhengzhou became the most famous barber shop in the country overnight.Not because the masters in this shop are highly skilled, but because it has created an astonishing record: two people get a haircut, and the fee is 1.2 yuan, with an average of 1 yuan per person.

On March 2008, 3, Xiaoya, a second-year student at a technical secondary school in Zhengzhou, and her classmate Xiaoli went shopping in the very bustling Erqi Square in Zhengzhou.At 29 o'clock in the afternoon, the two walked around the Zhenghong Building on Erqi Road, and saw the words "2 yuan for washing, cutting and blowing" pasted on the window glass of "Paul International" next to them, and they left after they were about to get a haircut. go in.

Before the haircut, the clerk showed them the consumption list, which was 38 yuan for washing, cutting and drying, 60 yuan for shampoo and 60 yuan for hair care products.

The two started cutting their hair, and it was about 6 o'clock in the afternoon after cutting their hair.But what the two girls never expected was that the cashier quoted a total price of 1.2 yuan at the checkout!
Because Xiaoya and Xiaoli couldn't afford that much money, the clerk refused to let them leave.Later, the clerk gave them advice, as long as they apply for a membership card of the store, they can enjoy a 9800% discount, but each membership card must be recharged at least 300 yuan at one time, and the remaining money will be stored in the card.The two had less than 10 yuan for living expenses at the time, so they had no choice but to take out their mobile phones and ask their classmates for help.At about 30:30 that night, Xiaoya and Xiaoli borrowed money from more than 9800 classmates, and they managed to collect [-] yuan and sent it to the store, and they were able to escape.

The barber shop charges 1.2 yuan, which is jaw-dropping.After being exposed by the media, Zhengzhou's "sky-high price haircut" incident aroused strong repercussions in the local area.

Price is an index of the ratio of commodity to currency exchange, or in other words, price is the monetary expression of value.Price is the transformed form obtained by the exchange value of commodities in the process of circulation.

In essence, price is a form of monetary value subordinate to and determined by value.The change of value is the internal and dominant factor of price change and the basis of price formation.However, since the price of a commodity is determined not only by the value of the commodity itself, but also by the value of the currency itself, changes in commodity prices do not necessarily reflect changes in commodity value.For example, when the value of a commodity remains unchanged, a change in the value of money will cause a change in the price of the commodity; similarly, a change in the value of the commodity will not necessarily cause a change in the price of the commodity.For example, when the value of a commodity and the value of money change in the same proportion in the same direction, a change in the value of the commodity does not cause a change in the price of the commodity.Therefore, although the price of a commodity expresses its value, there are still situations where the price of a commodity is inconsistent with its value.Under the condition of a simple commodity economy, the price of a commodity fluctuates directly around its value as the market supply and demand change; under the condition of a capitalist commodity economy, due to the competition among departments and the equalization of profits, the value of a commodity is transformed into the production price , Commodity prices fluctuate around production prices as the market supply and demand change.

Value is the basis of price, and commodity supply is the direct condition for the formation and change of price.Prices are the "barometer" of the market, reflecting the interaction and changes between supply and demand.Supply and demand are the forces that make a market economy work, determining how much of each good is produced and at what price it is sold.In addition, changes in prices are closely related to changes in the market environment.If you want to know how any event or policy will affect the price in the market, you should first consider how it will affect supply and demand.For example, when "SARS" hit China, the prices of vinegar, disinfectant, and medical masks all increased across the country, and some daily necessities became snapped up by ordinary consumers, mainly because of the sudden "SARS" virus. increased consumer demand for these items.In Europe, hotel prices in the Caribbean plummet each summer when the weather warms up in New England; gasoline prices rise and used Cadillacs fall in the U.S. when war breaks out in the Middle East, reflecting supply and demand The effect on the market, and all of this is reflected in the price.

Effectiveness: the magical effect of changing from time to time
In "Zhuangzi · Equality of Things", there is a story of "three times and four times".

In Song State, there was a man who liked raising monkeys very much. His name was Du Gong.His family raised a large group of monkeys, he could understand the meaning of the monkeys, and the monkeys also understood his mind.Sniper would rather reduce the family's food, but also meet the monkey's requirements.However, soon after, the family became more and more impoverished, and the sniper planned to reduce the amount of chestnuts for the monkeys, but he was afraid that the monkeys would not obey him, so he first deceived the monkeys and said: "I will give you three chestnuts in the morning and four in the evening, enough for you." Have you eaten yet?" The monkeys stood up when they heard this, very annoyed.After a while, the sniper said again: "I'll give you four chestnuts in the morning and three in the evening. Should this be enough?" The monkeys fell down on the ground one by one, very happy.

This idiom story originally exposed the deception of the sniper to fool the monkey, and warned people to pay attention to reality and prevent being deceived by rhetoric.In this story, the monkey appears as a stupid animal.In fact, from an economic point of view, we may draw quite different conclusions.The ancients believed that the total amount did not change, so they felt that three in the morning and four in the evening were exactly the same as four in the morning and three in the evening.In fact, it is not the case. There are still some differences between the three and the four and the four and the three. They can bring different effects to the monkeys.So, what is utility?

In the development history of economics, the emergence of the concept of "utility" is undoubtedly a breakthrough.The utility of goods is to satisfy people's desires and needs.Only when all items can satisfy the natural physical and spiritual desires of human beings can they become useful and valuable.In economics, utility is a measure of the happiness or satisfaction a consumer obtains from a set of goods and services.With this kind of scale, we can have a reference when talking about the increase or decrease of utility.Therefore, we can also have a measure when explaining whether an economic behavior brings benefits.Utility is different from the use value of the item itself.The use value is derived from the properties of the item, which is objective; the utility is the feeling of the consumer when consuming a certain item.

The utility theory of value emphasizes the degree of satisfaction of things to people, and the degree of satisfaction is completely subjective.The theory holds that subjective value is the basis of objective exchange value.The usefulness and scarcity of items are both indispensable factors for the formation of value and the origin of subjective value.In different locations, people's different subjective evaluation of steamed buns can illustrate this problem.

There was a poor man and a rich man in the village, and one day there was a sudden flood.The poor man climbed up a tree carrying the most precious thing in his family-a bag of steamed buns, and the rich man climbed up the tree carrying the most precious thing in his family-a bag of gold.The floodwaters show no signs of receding.On the first day, the poor man ate a steamed bun, but the rich man ate nothing and watched the poor man eat.The next day, the poor man ate another steamed bun, and the rich man's belly was already beating.On the third day, the rich couldn't help it anymore, so the rich said to the poor: "I will exchange a piece of gold for you for a steamed bun."Under this "unequal exchange", the rich and the poor finally survived this difficult period.In this difficult period, steamed buns are undoubtedly more useful to people than gold.

Economics relies on a basic premise that people, when making choices, tend to choose those goods and services that they consider to be of the highest value.Utility is the subjective feeling of consumers, which depends on how much consumers like this item, that is, preference.The greater the consumer's preference for a certain item, the greater the utility brought by this item, the more he is willing to buy, and the higher the demand.

As the saying goes, turnips and cabbage, each has its own love.If someone likes to smoke, cigarettes will have high utility for him, but for a lady who does not want to smell cigarettes, cigarettes will have low utility or even negative utility.Obviously, when making a decision, smokers will naturally regard cigarettes as a treasure, while women may be more interested in cosmetics or clothes.

Credit: the basis of commercial activities
In a village with simple folk customs, a young man owed a debt to others. When he was worried, his friends outside instigated him to steal watermelons from the neighbor's field while it was dark.Unable to withstand repeated instigation from his friends, he went to steal melons. When he smuggled watermelons out of the village, he was caught by his neighbors.Since then, this young man has gained the notoriety of "thief of melons". When the villagers educate their children, they all say: "Don't imitate so-and-so, and you will lose all the face of your family."

(End of this chapter)