What Is Economics
So far, there is a major gap in our chapter. We've predicted that you will like economics, because you don't have to rely on authority. But we have neglected to tell you what economics is. Has the ostensible subject of this book been forgotten As you can guess, the answer is no. An explanation of method is essential to understand economics, as we propose to do here. In one sense, it's obvious what economics is about topics such as prices, wages, production, banking, inflation, the business...
The Laws Of Logic
Now, we are going to dig a little deeper. Aristotle asked an important question. Why are the inference rules of logic true He thought that there are three laws that provide a foundation for all logical truth. These laws are sometimes called laws of thought, but this is a misnomer. According to Aristotle, these laws govern reality. The three laws are the following 2. Not A and not A The Law of Non-Contradiction 3. A or not A The Law of Excluded Middle We only have time to give a very brief...
Marginal Buyers And Sellers
All right if there are more buyers than sellers, buyers will bid up the price just to keep your hand in, state the analogous proposition that is true when there are more sellers than buyers . But which buyers will do this Obviously, economic theory cannot identify the specific buyers who will do this it does not tell you that John Jones or John Elway will bid up the price. 1. Why not Recall the discussion in an earlier chapter about praxeology. Economic theory deals in general propositions, not...
The Basis Of Marginal Utility
If we were to acquire more and more units of a good, we would put them to less and less valuable uses. Another way of saying this is that the usefulness, or utility, of the last unit of a good decreases, the more units of a good we have at a given time. This principle is the famous law of diminishing marginal utility. The marginal unit, to repeat, is the last unit. Unfortunately, some economists misunderstand the reasoning that establishes the principle of diminishing marginal utility. They...
Why Study Economics
Why, indeed A good short answer is that you can't get away from it. Almost everything you do involves economics. Why do people have to earn a living Why do some people heavyweight boxers, rock stars, and movie producers, for example earn vastly more than bus drivers or policemen What determines the price of a Big Mac, or, for that matter, a Mack truck Whenever you have to deal with money or prices, you are talking about economics. To paraphrase Monsieur Jourdain, a character in a play by the...