Economics

• A lot of economics is telling plausible stories to explain economic occurences
• economics cares about the productivity of a currency and its claim to purchase goods and services
• money lets us store and transfer productivity
• wealth is quality of life
• Economics is the study of human action and interaction in a world of limited resources and unlimited wants
• we live in a world of scarcity
• scarcity is natural, shortage is a problem
• benefit is the good that is done by the existence of something
• expected benefit is the amount of gain you expect to have because of buying something
• subjective value is the forward-looking expectation of benefit
• subjective value changes based on person, circumstances, time, etc.
• no voluntary trades exist without subjective value - you have to have something the seller values more than their product in order for them to give it to you
• Labor Theory of Value says that things have a value equal to the cost of materials and labor (comes from a misunderstanding of value)
• the value of an item is however much people are willing to pay for it
• value comes from expectation of benefit
• free and voluntary exchange ensures the creation of wealth
• self interest means that people will act in a way that maximizes their expected benefit
• if the trade is voluntary, then both parties gain regardless of their intentions
• the free market is the only manmade system that is not crippled by twisted human nature
• the only way to accumulate wealth in a free market is to provide a good or service that the consumer is willing to pay for
• government is a force that can act without outside oversight
• freedom is the extent to which you are the sole determinant of the object and fruits of your labor
• no society is totally free, but more freedom is still better than less
• government is inherently a reduction of freedom, but that is not necessarily a bad thing
• contracts are a mutually voluntary agreement to exchange goods and services for compensation
• contracts can be formal or implicit
• capital is resources that you can put to a specific use
• four kinds of capital are physical, financial, human, and social
• What does money do?

  it lets you transfer productivity

  shows us how much people are willing to give up
• What is Economics?


  the study of human action and interaction in a world of limited resources and unlimited wants
• What does Econ study?


  choices as influenced by information and incentive
• What is benefit?


  the good that is done by the existence of something
• What is subjective value?

  the forward-looking expectation of benefit
• Why can't trade exist without subjective value?

  you have to have something they value more than their product
• Where does value come from?

  expectation of benefit
• What ensures the creation of wealth?

  Free and Voluntary Exchange
• What is self-interest?


  when people act in a way that maximized their expected benefit
• What is the creation of wealth?

  the difference of value of the product and the value by the comsumer
• Why is voluntary exchange good?

  both parties gain from the trade regardless of their intentions - the free-market system is the only man-made system that is not crippled by bad intentions
• What is government from an economics perspective?

  force - the ability to act without accountability to anyone outside itself