Economic equilibrium In economics, economic equilibrium is a state where economic forces such as supply and demand are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. For example, in the standard text-book model of perfect competition, equilibrium occurs at the point at which quantity demanded and quantity supplied are equal. Market equilibrium in this case refers to a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers. This price is often called the competitive price or market clearing price and will tend not to change unless demand or supply changes and the quantity is called "competitive quantity" or market clearing quantity. Properties of equilibrium Three basic properties of equilibrium in general have been proposed by Huw Dixon. These are: Example: The competitive equilibrium. See also
Macroeconomics Circulation in macroeconomics. Macroeconomics (from the Greek prefix makro- meaning "large" and economics) is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies. With microeconomics, macroeconomics is one of the two most general fields in economics. While macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income). Basic macroeconomic concepts Output and income Unemployment Main article: Unemployment A chart using US data showing the relationship between economic growth and unemployment expressed by Okun's law. Inflation and deflation
Economics For a topical guide to this subject, see Outline of economics. Economics is the social science that studies the behavior of individuals, households, and organizations (called economic actors, players, or agents), when they manage or use scarce resources, which have alternative uses, to achieve desired ends. Agents are assumed to act rationally, have multiple desirable ends in sight, limited resources to obtain these ends, a set of stable preferences, a definite overall guiding objective, and the capability of making a choice. The traditional concern of economics is to gain an understanding of the processes that govern the production, distribution and consumption of goods and services in an exchange economy. An agent may have purposes or ends, such as reducing or protecting individuals from crime, on which he or she wants to spend resources. Definitions There are a variety of modern definitions of economics. J. Economics is a study of man in the ordinary business of life. Microeconomics
Thermoeconomics Thermoeconomics, also referred to as biophysical economics, is a school of heterodox economics that applies the laws of thermodynamics to economic theory. The term "thermoeconomics" was coined in 1962 by American engineer Myron Tribus, Thermoeconomics can be thought of as the statistical physics of economic value. Basis Thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood through the second law of thermodynamics but in terms of such economic criteria as productivity, efficiency, and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work. Thermodynamics Thermoeconomists maintain that human economic systems can be modeled as thermodynamic systems. Economic systems See also References ^ Jump up to: a b Sieniutycz, Stanislaw; Salamon, Peter (1990). Further reading
Scarcity Map of the global distribution of economic and physical water scarcity as of 2006 Scarcity is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. A common misconception on scarcity is that an item has to be important for it to be scarce. This is not true, for something to be scarce, something must be given up, or traded off, in order to obtain it. Concept The notion of scarcity is that there is never enough to satisfy all conceivable human wants, even at advanced states of human technology. For example, although air is more important to us than gold, it is cheaper simply because the production cost of air is zero. Other uses of the term scarcity In biology, the term scarcity can refer to the uncommonness or rarity of certain species. See also Notes References Milgate, Murray (March 2008).
Supply and demand The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product. If demand increases (demand curve shifts to the right) and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.If demand decreases (demand curve shifts to the left) and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.If demand remains unchanged and supply increases (supply curve shifts to the right), a surplus occurs, leading to a lower equilibrium price.If demand remains unchanged and supply decreases (supply curve shifts to the left), a shortage occurs, leading to a higher equilibrium price. Graphical representation of supply and demand Supply schedule The determinants of supply are: Demand schedule
Gift economy A gift economy, gift culture or gift exchange is a mode of exchange where valuables are not sold, but rather given without an explicit agreement for immediate or future rewards. In contrast to a barter economy or a market economy, social norms and custom govern gift exchange, rather than an explicit exchange of goods or services for money or some other commodity. According to anthropologists Maurice Bloch and Jonathan Parry, it is the unsettled relationship between market and non-market exchange that attracts the most attention. Gift economies are said, by some, to build communities, and that the market serves as an acid on those relationships. Principles of gift exchange Property and alienability Gift-giving is a form of transfer of property rights over particular objects. Gift vs prestation A Kula bracelet from the Trobriand Islands. Inalienable possessions Reciprocity and the "spirit of the gift" Charity, debt, and the 'poison of the gift'
Opportunity cost History The term was first used in 1914 by Austrian economist Friedrich von Wieser in his book Theorie der gesellschaftlichen Wirtschaft  (Theory of Social Economy). The idea had been anticipated by previous writers including Benjamin Franklin and Frédéric Bastiat. Franklin coined the phrase "Time is Money", and spelt out the associated opportunity cost reasoning in his “Advice to a Young Tradesman” (1746): “Remember that Time is Money. He that can earn Ten Shillings a Day by his Labour, and goes abroad, or sits idle one half of that Day, tho’ he spends but Sixpence during his Diversion or Idleness, ought not to reckon That the only Expence; he has really spent or rather thrown away Five Shillings besides.” Bastiat's 1848 essay "What Is Seen and What Is Not Seen" used opportunity cost reasoning in his critique of the broken window fallacy, and of what he saw as spurious arguments for public expenditure. Opportunity costs in production Explicit costs Implicit costs
Economic history Development as a separate field Treating economic history as a discrete academic discipline has been a contentious issue for many years. Academics at the London School of Economics and the University of Cambridge had numerous disputes over the separation of economics and economic history in the interwar era. In the initial period of the subject's development, the LSE position of separating economic history from economics won out. In the US, economic history has for a long time been regarded as a form of applied economics. In recent decades economic historians, following Douglass North, have tended to move away from narrowly quantitative studies toward institutional, social, and cultural history affecting the evolution of economies.[a 1] However, this trend has been criticized, most forcefully by Francesco Boldizzoni, as a form of economic imperialism "extending the neoclassical explanatory model to the realm of social relations History of socialism See also Notes
Economy In the past, economic activity was theorized to be bounded by natural resources, labor, and capital. This view ignores the value of technology (automation, accelerator of process, reduction of cost functions), and innovation (new products, services, processes, new markets, expands markets, diversification of markets, niche markets, increases revenue functions), especially that which produces intellectual property. A given economy is the result of a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions. The largest national economy in the Americas is the United States, Germany in Europe, Nigeria in Africa and China in Asia. Range Etymology History Ancient times GDP
World economy The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries' national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one. It can be evaluated in various kind of ways. It is inseparable from the geography and ecology of Earth, and is therefore something of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult.
Market economy Market economies can range from hypothetical laissez-faire and free market variants to regulated markets and interventionist variants. In reality market economies do not exist in pure form, since societies and governments regulate them to varying degrees. Most existing market economies include a degree of economic planning or state-directed activity, and are thus classified as mixed economies. The term free-market economy is sometimes used synonymously with market economy, but it may also refer to laissez-faire or Free-market anarchism. Capitalism Capitalism generally refers to economic system where the means of production are largely or entirely privately owned and operated for a profit, structured on the process of capital accumulation. There are different variations of capitalism with different relationships to markets. Capitalism has been dominant in the Western world since the end of feudalism, but most feel[who?] Anglo-Saxon model East Asian model "(...)