Intro - Economics (CU1 M1) - YouTube

welcome the unit 1 module one before you started I just like to say that this

video is meant to be a brief overview of what you'll be studying in this model

don't worry about trying to remember everything you see all this again in

much more details we go through the readings I just want to go over the key

concepts in this module so that the look familiar to you when they come up later

also if you feeling you to recap of this module later on, you can come back and

rewatch this year to give you a quick refresher in this unit we're going to be

going over

economics economics is the study of production consumption and transfer of

wealth basically it tries to understand how goods and services get created and

distributed and who wins at buying them now economics is a huge subject and will

barely be scratching the surface here but since businesses operate within this

year

important have a sense some of the basics before you can sell a product you

first must create it created from resources and those include land and

natural resources such as water minerals timber etc

labor which is your workforce capital which includes money and company assets

like manufacturing equipment and entrepreneurship which is the driving

force that brings the vision plan and execution altogether when you have your

product you're ready to put it in the market there are two major types of

economic systems plant and free market the free market system also known as

capitalism is built on the idea that consumer demands and business

competition will naturally work out what gets produced and who will buy it and a

plan market system though what gets produced and who winds up with those

products is determined by the government and economic system doesn't have to be

entirely one or the other

when elements of each of these systems is used it got a mixed market system

their reasons that some industries function better in the free market than

others but for now let's take a quick look at how the free market works

you've probably heard of supply and demand it's at the heart of the free

market system in the simplest terms refers to the idea that the supply

demand and the price of a particular good are all related to one another

essentially if there is a high demand for something that isn't short supply

its price will naturally be driven up and likewise if there is low demand for

something that there's a lot of the press will naturally fall but it's not

just supply and demand controlling the price price can also directly affect

supply and demand if there's a good selling for a particularly high price

for example makes producing that good more attractive more businesses will

start producing it began if the price of good is very low some businesses may not

be able to stay profitable and may either go out of business or find

another product to produce I said earlier that some industries function

better in the free market than others and that's because not all free market

competition is the same when we talk about free market and its natural

ability to respond to changing conditions are usually imagining it all

operating under perfect competition perfect competition means that there are

many businesses competing and many interested customers purchasing in the

marketplace this type of competition does a good job of adjusting the supply

demand and price like we talked about on the opposite end of the spectrum however

is what we call monopoly just like the goal of the board game where you're

trying to own all the properties monopoly means that there's only one

seller in the marketplace because there is no competition to naturally regulate

prices this is generally good for the seller but not so good for the consumers

the US government then will step in to regulate things to make sure monopoly is

informed in the first place these two forms of competition at the extremes but

there's a lot of room in between often for example companies produce similar

but not identical goods when every brand sells a differentiated version of a

product we call this monopolistic competition the final foreign

competition

oligopoly in this market there are only a few large competitors this is usually

because it's hard or impossible for smaller competitors to get into the

market so how do we know if the economy is doing well enough we assess the

economy in a variety of ways some of the more popular methods include looking at

GDP or gross domestic product which tells us the value of all goods and

services produced the higher the GDP the more value that being created and in

general the better the economy's doing

you can also look at the unemployment rate to lower the unemployment rate the

more people that are working and making money and contributing value to the

economy and finally we can look at inflation this is usually done by

looking at the Consumer Price Index which can tell us how much are dollars

worth a stable and predictable dollar value is best for the economy in general

since the USA is a free market economy no one including the government has full

control over it but there are some tools that can influence things these tools in

two categories the first is monetary policy the Federal Reserve or the Fed of

its called controls how much money is in circulation and what the standard

interest rates are you can use these powers to manipulate inflation rates and

encourage spending fiscal policy refers to the government's powers of taxing and

spending which can also be used to influence people spending habits easily

key points of the model to keep an eye out for them as they come up again as

you continue thanks for watching and good luck with the rest of the module

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