What Economics Is About
In Economics, things are divided between goods and bads. Goods refer to things that bring you satisfaction, or utility. There are two types of goods- tangible and intangible. An example of a tangible good would be a new car, because it brings you utility and satisfaction. An example of an intangible good would be a relationship that makes you happy and satisfied.
Bads refer to things that bring you satisfaction, or disutility. Coming down with strept throat is bad because it makes you unhappy. If you are in a relationship that brings more grief than good, then it is classified as a bad. People will pay money both to receive goods and to get rid of bads.
In order to produce goods you must have available resources. Resources can also be referred to as inputs, or factors of production. There are four categories of resources:
The first category is Land, which is sometimes called Natural Resources. Land can include things such as forests, water, unimproved land, oil, wood, and animals.
Second is Labor, which refers to the effort and talent, physical or mental, which is put into production. This includes things such as building your own house or sowing your own field.
Thirdly, there is Capital, which refers to produced goods that can be used as resources to produce other goods. Things such as factories and machinery fall into this category.
Entrepreneurship, the fourth category, includes specific talents people have for organizing and managing the above resources in order to create new business opportunities.
Scarcity is an economic term that refers to our resources, which are finite, being unable to meet the demands of our wants, which are infinite. Without scarcity, the study of economics would have nothing to base itself on. Thus, economics is defined as “the science of scarcity,” or the science of how we deal with the gap between our wants and our resources.
Scarcity has three effects. First, it forces people to...