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Supply and Demand: Part 2

By
Eliot
 – June 15, 2011Posted in: Beginnings, Econ Course Help

Right off the bat I will say that this post won’t really provide you much insight into the intuitive concepts of economics. I’m not really intending it to be that sort of post. I mentioned at the end of the first part of my Supply and Demand post that there was a lot more information buried into these concepts that we have to extract and that’s what I am going to do now. But I am doing it mainly because these concepts are tough for those of you who are taking high school or college level econ courses and this is part of my guide to those courses. You may notice that I’ve added a new menu to the top of the page and it’s for posts such as these that are really only serving to help those who are struggling through their courses. I know when I was a student, outside of the very dry and very technically written textbook, there was very little information or help available on some of these introductory concepts. That makes things difficult to understand and difficult to learn.

When I was young, I started to play a lot of tennis and really enjoyed the game. Instead of continuing to miss shots wildly and fail to complete many serves, I found a coach who worked with me to improve my game. The problem was that my coach ultimately taught me some really bad habits that made things very difficult as I got older and wanted to compete at higher and higher levels. I mention all of this to try and highlight the point that good instruction early is really important. If you are a college student sitting down in an introductory economics course right now and have an interest in going future with an economics education, it’s really important to understand these basic concepts really well. Like I said, when I was a student, there wasn’t many auxiliary information available. Given what I have learned and heard from the students that I have taught over the last few years, I think these posts should be a good resource to you. Because of all of this, this post (and others like it) will be much more geared towards a course framework and focus a little less on the intuitive story telling that I try to use throughout the other posts.

OK, enough introductory remarks, let’s get back to some super-duper exciting economics action…

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Supply and Demand

By
Eliot
 – May 26, 2011Posted in: Beginnings, Econ Course Help

It’s come the time, inevitable though it was, to talk about the concept nearly everyone recognizes to some degree when asked about economics. It’s the bread and butter, really. In my experience, using explicitly a supply and demand curve for analysis is actually rather rare. However, there is no question that this is where the party starts, to coin an expression. This is really the one post that really needs to be made before I can get into more advanced matters. Understanding the laws of supply and demand thoroughly is very akin to understanding how the world of economics operates, what sort of rules we are working with, and how a problem will be approached. Remember, economics is a perspective, a way of looking at things. You need to be able to see through that lens to understand why certain things are being said and why certain conclusions are being made. Without that lens, economics will forever be the “it’s all Greek to me” sort of topic for you.

One last comment before moving on. You should remember while reading this that, for this topic in particular, this is not a college-level course which will go more in-depth and more accurately derive the two laws. There will be a few things that I am sure I will miss or be a little more vague on. Just remember at the very least that the idea is to get the general picture, the intuition behind it all. This is not about trying to memorize definitions and precisely and flawlessly derive the concepts.

But enough of my caveats and concerns. Time to get to the ideas that I am sure most visiting this site are going to look for.

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The Monopoly Theory of Money and its History

By
Eliot
 – April 19, 2011Posted in: Beginnings

Exciting stuff! Double posts on your Monday afternoon! Seriously, the site has been slow to develop and now that I have some time I will be looking to get a lot more posts up. Let’s get that started right now…

Recently, you have probably heard from some pretty “smart” people on CNBC or in the New York Times (err… probably Wall Street Journal) voicing concerns about debt and what that will ultimately for one the most discussed economic concepts: inflation. In many ways, inflation is something that you already know and something that most are pretty capable of discussing. What we need to do, though, is think about it a little bit more closely and start to realize why inflation is a pretty important concept. In a quick historical sense, do research on some of the greatest economic collapses of the last few centuries and chances are you are going to read about stratospheric rates of inflation. When one item doubles in price over night it becomes nearly impossible to hold any sort of stability in an economy.

Of course, this sort of hyper-inflation is not quite what will be discussed or expected by economists and political commentators, but it’s a similar idea just in a more restrained sense. This isn’t supposed to be about doomsday messages and the end of the world, but to demonstrate how drastically important money is in our world. Recently, my dad did a great job of creating a metaphor for describing the role of money and inflation in the real world. So, sorry dad, but I am going to steal that story and share it with you.

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Tennis and the Theory of Games

By
Eliot
 – April 19, 2011Posted in: General

I wanted to get this post out sooner but a busy schedule has dictated that this site hasn’t progressed as quickly as I would have liked. You may recall a couple of weeks ago, during the 2010 Wimbledon championship, a stunning tennis match was played. In a first-round match, 23rd seed John Isner of the US and unseeded Nicolas Mahut of France played through the course of three days and 11 hours and 5 minutes. It set the record (by more than four hours) for the longest match ever played in the modern era, both in a major tournament and elsewhere. Being a former tennis player in high school, I watched intensely and marveled at how high the quality of played continued to be throughout each hour. If you haven’t watched, the match is superb and I definitely recommend catching some highlights from YouTube (posted later down the page).

Isner and Mahut at the end of the longest match in history

This match, though, became a practical application of some more economics. (What did you expect with this being an economics site?) Remember from before when I mentioned how economics is the study of human decision making. Naturally, this field has many diversified, sub-fields and one of the more “hib” fields recently is that of Game Theory. At first, when I told my parents during college that I was studying game theory, their reaction was that I was studying how to make Monopoly board games. That’s sorely inaccurate, but actually gets a little close to what game theory tries to explain. You see, Monopoly is a competitive game and within that game, there are hundreds  of decisions that are made. Do you buy this space or that space? Do you build a house at this property or that property? Do you mortgage a property? Do you not buy any property apart from the “good” ones? All these decisions, ultimately, describe a strategy. Most players, before the game begins, decide what strategy they are going to play. One strategy my mother always plays (quite annoyingly, in fact) is that she always buys any property she lands on and builds houses and hotels as soon as possible. Good property or bad property, it doesn’t matter, she buys all of it. What’s important here is that there is a strategic element to the decision. Thus, game theory is the study of strategic settings, or games. The task, then, is to find a strategy that the players can play within these games that leads to an equilibrium result.

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An early example: what to have for dinner

By
Eliot
 – July 8, 2010Posted in: Beginnings

I’ve decided to make these first few posts pretty linear in their subject content. What that means is that if you haven’t read the last few posts (particularly this one), you’re likely to get less out of the post. I’ve mentioned this before, but to get the most out of the site, I really recommend you read these other posts. As of now, the site is very early in development so there isn’t a whole lot to read through. But I can assure you that there are more posts coming that will reference a lot this perspective.

I wrote in other posts and in the little site description to the side of the site that economics is a perspective. It’s a way of looking at things. It’s a lens. Attaining that lens takes time and effort. I’ve tutored and taught dozens of students whom in particular expected economics to pretty simple, that it was nothing more than a matter of memorizing definitions. That method of memorization simply doesn’t teach the lens. It teaches the terms, and you will likely be able to use the terms in a technical conversation. But to really grasp economics, the understanding of the lens, of how a problem or situation is perceived, is paramount. In simple terms, it’s important to know the story we are trying to tell. No matter what we talk about, there is a story that is trying to be explained or theorized. Understanding that story allows us a more intuitive understanding of what we are trying to accomplish. Yes, we will throw technical jargon at it and turn it into an objective science, but underlying it all is that story. Not understanding that story makes it very difficult to understand anything else.

Fortunately, understanding the story is probably the easiest part of the entire process. It just takes a little time to grasp this lens and get used to recognizing the story. To demonstrate, this post is going to look more closely at some of the decisions that we make every day. The goal isn’t to necessarily bombard with technical knowledge but to drive home the idea that the story, the intuition, is important. So, we all eat, right? How we make that decision is what is going on after the break.

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What is economics?

By
Eliot
 – June 26, 2010Posted in: Beginnings

If you ask most people what economics is, chances are you will get a response that has something to do with supply and demand. “You’ve got one line that goes up, another that goes down, and they intersect at some point.” You might get a little word rearrangement with, “It’s the study of the economy.” Both are correct, but surely incomplete. It’s a bit like me asking you, “What is mathematics?” If your response is, “Mathematics is addition,” you would be correct that addition is a part of mathematics, but there is certainly a whole lot more in the world of math than addition. And the same is true with economics. The perception of economics is mainly focused solely on supply and demand. To get you thinking more about the “greater picture”, we need to first start off with what economics actually is and, in general, how it works.

Quickly before we get to that though, I should clarify that this post is part of series that I am calling “Beginnings.” What that means is that this is part one of a series of posts that introduces you the ideas that dominate all the other posts. Going back to the math example, it’s very difficult to understand multiplication if you don’t understand addition, and it’s very difficult to understand addition if the concept of numbers is completely foreign. These posts are going to (cliche alert) set the foundation for all the others. I really recommend you read all the Beginnings posts  before diving into the others so that you are able to really comprehend all the ideas instead of only skimming the surface (I have more posts coming, it’s just going to take a while to type them up. So check back often in these early stages for these posts).

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