what is economics?

a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services
(http://www.merriam-webster.com/dictionary/economics)

the study of how society uses its scarce resources.
(http://www.economist.com/research/economics/alphabetic.cfm?letter=E#economics)

and believe it or not, i had my first economics lesson by Mr Li MJ on board bus 852 yesterday...

i learnt the definition of 'demand'
(stuff which people are WILLING and ABLE to pay for)

i think i'm supposed to have learnt the definition of 'suppy'
(ehh...'stuff' which are available at a price that the 'supplier' is willing to offer?. sorry MJ, i am not good with definitions.......)

and then, MJ decided that i was smart enough to understand demand curve

A graph showing the relationship between the price of a good and the amount of demand for it at different prices
(http://www.economist.com/research/economics/alphabetic.cfm?term=demandcurve#demandcurve)

but obviously he overestimated me...
and i drew a complete blank when he drew the graph...
a simple linear graph...it wasn't even a curve!




so he tries to explain it...
"at a particular price, there will be certain quantity that is 'in demand'
i.e. at a particular price, people are willing and able to pay for a certain amount of the 'stuff'
so at P1, people are willing and able to buy Q1. But at P2, people are willing and able to buy Q2. so the graph is a plot of all these prices and quantities....get it?"

idiot that i was, i was completely dumbfounded...
and i think MJ was starting to regret this impromptu econs lesson on a bus...

enters my 'cheeseburger' explanation

"so, if cheeseburgers are sold at say $1 per burger (P1), people are willing and able to buy 10 (Q1). But if sold at $0.50 per burger (P2), people are willing and able to buy 20 (Q2). and so on and so forth...right?"

from my perspective, MJ beamed like a proud parent...
or maybe he was just glad that i finally am starting to get some of the things he is talking about

-_-

He then went on to explain suppy curve

A graph of the relationship between the price of a good and the amount supplied at different prices. (http://www.economist.com/research/economics/alphabetic.cfm?letter=S#supplycurve)
He didn't draw a graph this time cos i stopped him
(i only need to feel like an idiot once a day)
but in my own head, i visualised a graph with the opposite relationship

so based on 'cheeseburgers',
if selling at $1 per burger, 20 burgers will be supplied. If selling at $0.50 per burger, 10 burgers will be supplied... (or something to that effect)

so...if these 2 graphs are superimposed on each other..
there will be an intersection point
known as Equilibrium, when supply and demand are in balance.

At the equilibrium price, the quantity that buyers are willing to buy exactly matches the quantity that sellers are willing to sell. (http://www.economist.com/research/economics/alphabetic.cfm?letter=E#equilibrium)




Therefore, in terms of "cheeseburgers"...
Supplier willing to make 15 burgers at $0.75 each, and consumers willing and able to pay for 15 burgers at $0.75 each

everyone is happy! supply meets demand!

and with that, my first lesson in economics ended *PHEW*
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
of course, all of the econs students (ex, present, future) are waiting to slaughter me for oversimplifying the graphs and relationships...
but hey!
any lay person out there will be happier with my 'cheeseburger' explanation...
because seriously,
jargon should be reserved for the 'pros'

MJ is really hyped that i am starting to take 1 tiny step in understanding something that is very important and useful to him

me?

i just hope that i dun look like an idiot all the time when he talks about econs...

and now...
it's sunday afternoon...
no more work...

back to my trashy novel :D

PS: i know my graphs doesn't truly reflect the 'cheeseburger' explanation because the gradients of both graphs do not match. But, it was just for representation...not drawn to scale and not possible to unless i waste the rest of my sunday using Paint to come up with perfect graphs.