Economic
Concepts for
People in a Hurry
8 easy to understand economic
concepts in 12 minutes.
Economic
Concepts for
People in a Hurry
8 easy to understand economic
concepts in 12 minutes
By
Peter Lim
2018 by Peter Lim.
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Disclaimer
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The author has made every effort to ensure the
accuracy of the information within this book was correct
at time of publication. The author does not assume and
hereby disclaims any liability to any party for any loss,
damage, or disruption caused by errors or omissions,
whether such errors or omissions result from accident,
negligence, or any other cause.
About the Author
My name is Peter Lim, I have a strong passion
for economics.
Acknowledgment
I would like to thank my undergraduate
economics teacher, Mr. Stephen Tan.
About this book
In this book, I write about the 8 most basic
economic concept that is straight to the point.
Content Page
Demand and Supply..................................................... 1
Opportunity Cost ........................................................... 3
Wants vs Needs.............................................................. 5
Scarcity ........................................................................... 7
Incentives........................................................................ 9
Trade ............................................................................. 11
Inflation ......................................................................... 13
Cost vs Benefits ............................................................ 15
Chapter One
Demand and
Supply
1
Let’s assume that a new scientific study is
published on the benefits of Pineapples. How
Pineapples cures all diseases known to man. The
news of this study spreads to all TV stations and
YouTube channels. People will then go to their
supermarkets and buy up Pineapples, so the
demand for pineapples increases.
The demand increases so much so that there isn’t
enough Pineapples to sell to all those people that
demands it. Naturally, the price of Pineapple rises.
So, the suppliers of Pineapples, which are growers
and distributes pick on price increment of
Pineapples and start producing more.
As time goes on, there will be more Pineapples in
the market then there is demand for it. Because of
this the price of Pineapple then goes back to its
original price.
2
Chapter Two
Opportunity Cost
3
Imagine just having $1. The price of 1 apple
cost $1. The price of a Kiwi cost $1 as well. If
you decided to by the apple, the opportunity
cost is the Kiwi and vice versa.
4
Chapter Three
Wants vs Needs
5
Wants are desires to own or do something.
For example, you may want a Ferrari. Needs
on the other hand are basic requirements for
human survival like water, food and shelter.
There is more demand for products or
services that are needs as compared to
wants.
6
Chapter Four
Scarcity
7
Scarcity is defined as a condition of limited
resources, where society does not have
sufficient resources to produce enough to
cater to all of the wants. Gold, for example,
is a scarce resource. There is huge demand
for Gold but it is extremely scare, as a result
the price of gold is extremely high.
8
Chapter Five
Incentives
9
Incentives are something that induces a
person to act by offering rewards to
people to change their behavior.
Incentives may be negative or a positive.
Example of positive incentive: by offering
a raise in the salary of whosoever works
harder can induce people to work harder.
Example of a negative incentive: Whereas
putting a tax on cigarettes, can induce
people to smoke less.
10
Chapter Six
Trade
11
Trade can make everyone better off. Let’s
assume you have an orange and your friend
has a pear. You feel like eating pear and your
friend an orange. You and your friend can
trade fruits. By trading with others, people
can buy a greater variety of goods or
services.
12
Chapter Seven
Inflation
13
After inflation, your dollar does not go as
far as it did in the past. If the inflation rate is
2% annually, then theoretically a $1 bar of
chocolate will cost $1.02 in a year from now.
14
Chapter Eight
Cost vs Benefits
15
Cost-benefit analysis is an approach to
making business decisions: all the benefits
are put on one side of the balance and all the
costs are put on the other. For example. if
you are planning on buying a new laptop, list
the cost on one side and the list of benefits
on the other side. If the benefits outweighs
the cost, it makes sense to buy the Laptop.
16
Economic
Concepts for
People in a Hurry
8 easy to understand economic
concepts in 12 minutes
By
Peter Lim
17