Economics - Markets and Organizations.

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As part of my new college course that I have started from January. I will use this as a chance to share what I am learning with the @leofinance community while documenting my new lessons by blogging about them for myself. What better way to study my topic in depth than by writing all about it on the chain and for others to read and question it.



Module – Economics for business.




Lecture 1: Markets and Organisations.



Objectives

  • Learn how markets work.
  • Understand the economic approach of organisations towards these markets.



Main body


For markets to operate, their has to be a resource that is in demand. That can be time, labour, goods, capital ect...

The markets are driven by the scarcity of any given resource.

Low supply and high demand will lead to a strong market while a high supply and low demand gives us a weak market. Scarcity exists everywhere and is the key component in determining market price.
The price contains a lot of the information needed for the market and will be used as the determining factor where possible. If the price does not have enough information for the market to decide. It will be done by an organisation that has more information on the product.

The economic question is how to make the best use of available resources for maximum efficiency.
In the case of any organisation this starts with the division of labour.
Some work will be specialised such as management or supply chain so there will need to be coordination between these specialized sections.

This co-ordination can be seen on both the market side and the organisation side. The link between them is information. This allows for greater co-ordination between all parties and an allocation of the resources.

This is then balanced against external factors such as nature, politics, calendar ect... to create the economic approach for organisation.



Conclusion

To end the lecture we were asked a very simple question,


Suppose you are a Saudi prince and studying economics at Oxford University in the UK. Your family sends you a very large monthly allowance to cover tuition and other expenses. In fact, this allowance is more than ten times the average allowance of the other students. Do you think that you would still have an economic problem? Why? Provide one example.



My answer was,

There could still be an economic problem here. We don’t have all of the relevant information to give a fully accurate answer.

However, unless there is balance in your personal life then there could still be an economic problem. While you might have an abundance of money, there could be a scarcity of other resources. This could include, friends, motivation, safety ect...

Money is not the solution to any economic problem rather it is a single factor. If you have 10 times more money than the rest of your fellow students then it means that the majority of them could have a scarcity of financial resources which can cause a lot of problems for them and for you as the imbalance is so large.

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unless there is balance in your personal life then there could still be an economic problem.

So true because everything effects everything

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Exactly. If you have too much or too little of anything you are thrown off balance. It's all connected.