Principles of Economics

 

We said that a group of economic babies have formed a large number of sects, the largest of which are two, one is called [microeconomics] and the other is [macroeconomics].

The naming method is also very simple and rude. [Micro] One group studies individual decisions, while the [Macro] group analyzes the overall situation.

When it comes to economics, many people think of Adam Smith* (Adam Smith, 1776) and his book " The Wealth of Nations " (The Wealth of Nations). Those who have studied a little bit will remember The General Theory of Employment, Interest, and Money by Sir John Maynard Keynes (1st Baron Keynes, 1936). But now even if it is a fellow in economics, not many people have read these two books.

Therefore, I have the first major stalk of economics, "After all, the British are not good at math."

But in fact, economics, as the foundation of a nation, had many obscure and unsystematic contents in major civilizations before it became a “discipline”.

The Nepalese plus two (Ferdinando Galliano, 1751) is to be regarded as classical economics [] pioneers, his "on the money" (the On Money) is the first systematic analysis of modern economics. It was only 25 years later that Adam Smith came out with his invisible hand.

In the period of classicism, another major breakthrough in economics was the [Political Economics] created by the "Das Capital" written by dear Marx. Among them, the analysis of the essence of capitalism can be said to be a breakthrough. Marx’s ideas seem to be somewhat for the economics students under the current mainstream education of economics tuition, but he has to admit that Marx understands his society and human nature. Perhaps it is the age that is doomed to destiny, Marx left unfinished works and his beloved wife and good (ji) friends and died.

Out of the inheritance of the predecessors [Classical Economics]

The [Neo-Classical Economics] that began in the 1870s regarded the free market as more important than life (fog). Emphasize the importance of "laissez-faire". At the same time, there has also been research on the [business cycle], and the classic fallacy that "business cycles are related to sunspot changes". #The words can’t be said too much; in case it is really relevant.

Bipeds familiar with history probably know what happened afterwards. The Great Depression of the 1930s swept across the European and American markets. At that time, [Keynesianism] came into being. The market will fail, and the government needs to use their visible hand to regulate in time. However, this regulation is still in a stage of "tightening when inflation is high, and stimulating when growth is slow."

Therefore, when encountering stagflation, there is

At about this time, John Nash obtained his Ph.D. with only one-sided thesis, and began the era of systematic research on game theory. # Is also a paper that was inexplicably lying on the gun some time ago.

In addition, econometrics, monetary economics, health economics... a series of sub-disciplines have sprung up, filling a large number of (\crossed out) peacock (\crossed out) vacancies in general theory. These are knowledge that even undergraduates of economics may not be able to understand, so fill in the hole first and then fill it in slowly.

 

Since its development, various types of hypotheses have emerged one after another, and even opposite answers to the same problem can share a certain economic award in the same year.

 

  ====The dividing line at the end of the story ====

Speaking of this sectarian dispute, the whole history of economic thought will be discussed further. If there are many interested readers, we will consider opening a new topic. And for the economic classics mentioned above, if there are many interested readers, they will consider publishing Ben Miao’s reading notes.

And now, what Banqiao tells you is the most basic economic principle. Might as well, just start with [microeconomics].

Microeconomics is nothing more than two points, "scarcity (scarcity) " and "efficiency (Efficiency) ", how efficiently the limited resources given to everyone, do not pay attention to "fair" you.

"Fairness" in the eyes of economics is measured by Pareto optimality, that is, "if a person can only become better by making others worse, then Pareto optimality has been reached." Banqiao’s favorite example is:

And "Pareto Improvement" is:

On the other hand, since we can always treat "all other commodities" as one commodity, we can usually simplify the model to a choice between two commodities.

After all, economics is a process of modeling.

The application of the model is always based on some specific assumptions. One of the biggest and most helpless assumptions in economics is the "rational man assumption", which is comparable to "a spherical chicken in a vacuum."

As the name suggests, the "rational man hypothesis" requires everyone to be rational. "Rationality" here means "all actions are based on maximizing their own utility", just like Plato's "land of philosophers".

However, the important point is that the assumption of "rationality" does not require "omniscience", especially when faced with uncertain situations, rational people cannot predict the final result, but they must know the probability distribution and know the distribution of Under the conditions, the optimal operation must be found to maximize its own utility.

Another commonly used assumption is "market clear", that is, total supply is always equal to total demand

Transactions can always be completed directly. Another similar but always confused is "supply creates demand." However, this is not entirely true. In fact, this is more of a simplified treatment based on the premise that "inventory" is regarded as part of "investment."

However, for specific operations and more introduction to microeconomics, please look forward to revealing the secret next time.

Welcome to shoot bricks in the comment area. Banqiao will pick up all the bricks and build a temple of knowledge for you two-legged beasts