Objectives and scope of the economy:
Economic Studies aims to discover the natural laws governing the economy and the scope is to find the ideal principles for economic activities based on the results.
There is nothing like free food:
This is the most fundamental law of nature that everything has a value in both monetary and non monetary. Although in general the things that have financial and non-monetary, is never less than simplicity and understanding is considered only the financial aspect of things in the economy.
It is the most important idea and very difficult to logically explain, and somehow not really possible to prove mathematically. Perhaps to understand people who think outside of logic and one can understand the strange experience of his own. What invisible hand that plays a role in making financial changes among individuals, groups and even among nations can be understood through the study of natural phenomena. The animal kingdom, the world’s plants, turning the process of sun, rain, disease, war, disasters, etc. In addition to the individual’s mental condition is constantly changing and mysteriously affecting decision-making and other powers that produce changes in economic, financial. invisible and unpredictable uncontrollable factors independent of human will make financial changes.
Definition of economics:
Economics deals with the efficiency of management (around the world and entrepreneur) have limited resources to satisfy unlimited human desire to apply science and technology in the market.
* Effectiveness can be defined as doing things better.
Basic economic problems:
The scarcity of resources, unlimited wants and options:
It is a known fact that our resources (time, materials, land, human resources, machines, money, etc) is limited, while our desires are not restricted and repetitive so we must make choices between alternatives that are available to satisfy our desire .
economic resources can be classified into four categories:
Land O and raw materials
This is a gift of nature. All things come from nature are included in this category.
O / Labor:
It is man’s contribution.
It consists of plant and equipment.
Mind / or entrepreneurial skills:
Entrepreneurship capacity refers to the ability to manage production risks and bears. Some people are smarter and have a way to handle things better than others. This is due to their contribution to this company grows. For this reason, we classify these resources separately from the job.
Motivating force – Personal interest:
This is an interest that makes us act. This is also very important to mention that the economy can not be separated from the study areas. All knowledge is interconnected. Adam Smith, which has a significant influence on the formation of modern economic thinking in the West is a professor of moral philosophy, which is the right type of life. It is a fact that everyone tries to make the most of its available resources to make them happy. We assume that people follow their interest to make a choice between alternatives. Also worth mentioning here that the very different interests of selfishness. As a rule of life: “The interest is in the best interest.”
* Selfish is a temporary short-term self-interest is the long-term phenomenon.
Logic and logical errors:
Interpersonal communication is based on logic. Similarly, all human knowledge, namely, experiences and opinions of all men from the beginning, is also provided on the basis of logic. Although logic is not instantly and largely again due to human limitations in our interpersonal communication that rely on logic. The logic can be defined as the science of correct reasoning.
OR logic errors and errors:
Here we will cite two major errors of logic that makes the human knowledge of wrong. They are:
§ Post hoc, ergo propter hoc error (the association as a cause)
This occurs when a bad event is another question, and preceding the other.
§ fallacy of composition
This happens when one assumes that what is good for every individual in isolation is also valid for the whole group.
Supply and demand:
In any economy prices are determined by the interaction of supply and demand. All economy revolve around two basic concepts.
Or the application:
Demand is the relationship between price and quantity demanded of a good in a given period, holding other factors such as tastes, preferences, etc. The state is constant, taking into account price as the deciding factor.
Or the source:
relationship between bid price and the quantity of the goods within a specified period while keeping things being equal, taking into account price as the deciding factor.
Ecnomic fundamental questions:
Role of Government:
the government’s role should be minimized. For efficient management, civil society is much more important and more effective than the political community.
Markets, the interaction of supply and demand, not government, should set wages and prices. Similarly, monetary policy must also be determined by the interplay of market forces. Taxes collected by the government should be minimal. lower taxes that provide the basic incentives for employers and individuals to work hard and invest again to get a larger, thus increasing economic activity. The government’s role should be minimized so that the government should do things that citizens can not do it alone. Very high level of corruption in public enterprises and the efficiency of public enterprises is much less than private companies.
The government must control spending and expenditures must match revenues. Bigger government is the biggest problem. Therefore, decentralization and labor to private firms can not very suitable for efficient management.
The rules and regulations should be formulated to maintain equity between members of society and the law must be equal for everyone.
Tariffs and other barriers to trade should be completely abolished gradually. Free trade can be very fast and improve economic conditions in general, and because the social conditions of society. In short, defining the best government that governs a little.
Entrepreneur and Entrepreneurship:
Entrepreneurship is an important aspect of economic growth and development. Because of this importance should be studied in depth. Employers are talented people who have the gift of resource management and vision is concerned to visualize things much better than ordinary people. strong economic growth to provide a suitable environment for entrepreneurship and the freedom to grow that eventually led to the development and economic growth.
An important element in the economic field of study is economic growth. Basically, the reason of all economic activity in improving the quality of life. We have learned that the way the standard of living is high. Education plays an important role in improving the overall quality of life in the long term. The results of the formation of capital resources are used carefully and finding new ways to improve the means of production are using new technologies, which is a consequence of the knowledge gained by getting an education. Consequently, capital formation is a key factor for economic growth.
Exchange, monetary and nonmonetary, is an integral part of all human activity. The man exchanged views / products / services, etc, because they feel they get in return. However, in the economy that we are interested only in exchange for monetary views / products / services, etc. is incorrect to assume that our world is a zero-sum world who benefit from some of the other losses. In fact and fortunately, we live in a positive-sum world. If this happens then the progress in our world never materialized. However it is not required that all monetary exchanges as both sides will get. In addition, the value obtained in the exchange between two people or groups can not be accurately assessed by a third due to the exchange rate is very different for different people.
And increased free trade, free of violence and coercion, would produce a relatively more equitable transactions and thus increased revenue opportunities for the two most feasible.
In fact, accurate information that is not fully known which results in a higher trade imbalance. In the hypothetical rule we can easily conclude that when information is needed to trade benefits for both parties.
The prevalence of competition in the deposit of the economy in the world are universal, lack of resources and endless and to be repeated. Where competition has negative consequences, is also a positive impact. This is a competitive element that encourages individuals to excel is different, which leads to more discovery, technological progress and the search for new ways to derive greater benefits which consequently increases the level of general prosperity in the world. Those are the ethical aspects of competition in which some people start to violence and fraud that led to violence in society. The competition can not be eliminated from any society, but any attempt to eliminate competition will lead to regression and more violent. Therefore, the check should be imposed on the negative effects of competition.
Effective management of resources (time, skills, etc. Natural) need people to work together to use resources optimally. In addition, most natural resources should be modified to be used and be useful. Groups must work together to succeed. Cooperation juxtaposed with positive competition is an ideal combination of efficiency.
Specialization and comparative advantage:
natural inequalities between human beings is a fact of life. Economy goals for effective management in order to maximize the human resources of several people with expertise in specific areas can be better than others because of their natural abilities. For this reason, some people have a comparative advantage over others.
The information is very important to make a rational decision information. However, accurate information is not possible for any person because of the human mind, because every human being is unique, and also by an unexpected future. Information on market performance is diverse and everywhere. It is therefore not possible for everyone to improve information and our decisions on the future of the best is only an estimate with a great opportunity.
Benefits pregnant and dominant and the loss of an important determinant of investment. Provides criteria for goods and services must be produced. When the short-term demand of the product is an important factor in promoting investment trends, the gain or loss is the litmus test for products made in the long term.
Not for sale:
This is a general principle that to get something we need something loose. The most important resources for the moment, people are limited. So no one can do it all yourself, so that rational individual time to focus on tasks for which a person can do better. But it is impossible to accurately measure the time required for an activity is equal to the lack of activity / activities. But to understand this concept of economists assume that the price of participating in some activities is equal to the cost of activities and other activities that have been slaughtered.
Supply and demand determine the prices of their products on the market. This is affirmed by the majority of people that determine the cost of the product price. In fact, it was the marketing activities of manufacturers and consumer perceptions about the product that determines the price of the product. In general, higher prices will reduce demand and vice versa. However, in some cases, due to the nature of products and marketing efforts of producer prices is higher demand for higher ground.
Causation – Cause and effect:
Despite the limitations of logic, causality is the most important phenomenon in understanding of economic theory and practice. Excluding the phenomenon of all mega-mega-microscopic and macroscopic, so to have an impact and effects that are causing some of the countless other titles. As this is a cause and effect in the world, many people and groups from their actions have a significant impact on other elements in the economy. Despite the complexity of the relationship that is so chaotic, understanding these relationships can help make good estimates about the future and form opinions on the comparative market trends.
In this area, we learned that wages are determined. Like all other market wages set by the interaction of supply and demand. higher wages can not be achieved through greater investment and economic activity in the long term. Employment and unemployment is a key issue we have learned in this area. The ups and downs of the economy is a fact that can not be avoided. high consumption rates required for a capital inflow will increase the general level of wages and reduce unemployment results.
Nobody knows the future. It is the fear of the future that is an integral part of our lives and also a stimulus to human activity. Uncertainty factors gave rise to the notion of risk. There is always the risk level in all human activities. In general: The uncertainty about the natural law to reward or punish human action “higher risk, higher reward.”. There is also a natural way of teaching
and create new ideas and new participants known to accommodate new members and effective.
Making public finances are directly related to the role of government. Bigger government, more funds needed to finance it. The principle of responsibility is of critical importance in public enterprises, because the ownership of the company has no private owners. In addition, funds must be received from those who benefit from these services.
Money and Banking:
Bank in an economy is a factor in measuring performance. Money is a medium of exchange that facilitates transactions between participants in the economy. Banks play an intermediary role. Interest rates and exchange rate against other international currencies established by the central bank. But ideally, it is preferable that the forces of supply and demand of the judge.
The increased level of consumption is a key factor in all economic activities to reduce costs, create jobs, improve living standards and eradicate poverty.
On the other hand, increased consumption of resource depletion can lead to very inappropriate in a particular market and causing inflation. If this situation is to extend that lead to the recession of depression. Therefore, intelligent political moderation is the ideal combination.
Marketing is the key to stimulating demand and thus increase economic activity. Employers have a great capacity to understand the economic environment, marketing and customer demand to know beforehand, and find a new segment that the result would raise the overall standard of living.
Costs and Production:
Each case requires a fee. Find the best method to produce goods with a minimum fee that can be very important for companies to make profits and be competitive.
The technology that makes the difference between now and before. The problem encountered by humans at all times is very similar, but each time technology to determine the mode of production and lifestyle. The technology is very important to understand the economy and us to significantly reduce the cost and even reach new markets that can happen with foreign technology. In addition to improving the standard of living by simplifying complex tasks.