Economics can solve the confusion in human life, where he tells people what, why and what to do. Economics can be said to be a fundamental and important subject。
"economics is an art that makes life happy."
So, how do we cross this threshold of happiness? The ten principles of manquin may be a solution。
Trade-offs
Choice can be seen as a process of judgement and abandonment, with the ideal of multiple possibilities, with the criterion of maximum effectiveness (opportunity gains reduced opportunity costs). Clear and correct costing of costs and benefits, risk assessment and, more importantly, right choices. There are five steps for reference:
1) list all possible actions
2) the results of all actions
3) assess the probability of all results occurring
4) express your desire or fear for all results
5) making sound decisions
Opportunities cost
Where resources are limited, gains must be lost. The opportunity cost is the best possible benefit that is lost without the choice. This opportunity must be a project of your choice, and the opportunity cost refers to the project that benefits most from the opportunity to give up。
People think rationally about maximizing benefits from limited resources. The opportunity costs arise from the scarcity of resources。
Marginal effects
The degree of satisfaction that each person receives when consuming an item decreases as consumption increases. For example, people who like soup are the most satisfied when they drink the first bowl of soup. After a bowl and a bowl, the level of satisfaction is decreasing and becomes even a burden。
It is important to note that the decreasing marginal effect corresponds to an increase in the number of the same things. Consumers face different things and meet different needs, and here the marginal effects are diminishing。
Incentive response
When one or more of the benefits and costs changes, the rational choice changes accordingly, i. E. People make different choices about different incentives。
Good incentives stimulate work. Incentive mechanisms, or the level of incentive, determine performance。
Incentives are divided into: material, spiritual, mission, data and enhanced incentives。
Comparative advantages
Trade can make everyone better。
Comparative advantage has two concepts: absolute cost advantage & relative cost advantage
Absolute cost advantage: proposed by adam smith. The reason for international trade is the difference in absolute costs between countries, which, if a country spends absolutely less on the production of a commodity than another country, it has the absolute advantage of the product, which allows it to be exported, and vice versa。
Relative cost advantages: submitted by david ricardo. A country should fully produce and export products that had a comparative advantage, not produce but import products that were more disadvantaged。
The invisible hand
Every person in society seeks personal satisfaction, and people consciously regulate their behaviour in accordance with the role of market mechanisms and maximize consumption and profit。
Markets provide a mechanism by which market regulation is like an invisible hand, and prices are an invisible hand as a tool to guide economic activity。
Government intervention
Governments must balance and regulate major structural problems in the functioning of the economy。
The market itself had the role of regulating the economy, but government protection was essential. Markets can operate effectively with the protection of government macro-regulatory policies. In other words, the market itself is blind, and some markets are unable to allocate resources。
Productivity
The standard of living of a country depends on its ability to produce goods and services. Higher levels of per capita income require higher productivity. The factors of absolute productivity are:
The average proficiency of workers
2) the level of development of science and technology
3) organization of the production process
4) the scale and efficiency of production resources
5. Natural conditions
Inflation
Changes in money supply can affect price levels in economies. When the amount of money required in circulation exceeds the amount indicated by the value of the currency issued, the value of the currency is depreciated and prices rise。
Assuming that, before the increase in the supply of money, society had achieved full employment, when the supply of money had increased and the supply of money exceeded demand, people would find ways to spend the surplus. When the surplus currency pursues more items, the price of the items increases。
Phillips curve
When unemployment is low, monetary wage growth is higher. This curve can indicate the alternation between unemployment and inflation, high unemployment and low inflation. There is a reverse shift between unemployment and inflation。
The increase in the monetary wage rate is the cause of inflation, i. E., the increase in the monetary wage rate exceeds the increase in labour productivity, leading to an increase in prices, which leads to inflation。
Even if you don't learn the economy, you should understand。
