Economics

= __**Economics**__ =

[|Economics] is the study of the production, distribution, and consumption of goods and services. [|Domestication] of animals and plants, during the Neolithic Era thousands of years ago, led to the rise of [|agriculture]

Trade began to occur because people now had possessions that other people wanted or needed. People assigned value to the things that they owned. Some people possessed more things of value than others, which created inequality between people. This inequality in turn led to classes, which were characterized by the value and number of possessions people had. While some people suffered in poverty, others became wealthy and lived a luxurious lifestyle. This created the conflict between rich and poor, a problem that still exists today. With their wealth, people gained power, which was sometimes challenged, leading to revolution or war.

The invention of coins and [|paper money] created new possibilities for trade, but did not solve the problems arising from power and class conflict. Economics, as previously described, influences everything that we do because everything involves some financial decision. People have always had wants and needs. A “want” is something that does not affect one’s survival in a beneficial way, such as a television. In contrast, a “need” is something that a human must have in order to survive, such as water or food.

The production of goods has created flourishing communities for humans around the world. Production results in [|goods], that can be bought and sold. Production is determined by several factors, which include natural resources, human resources, and capital resources. [|Natural resources] are resources that come from the Earth, such as coal and [|oil]. Natural resources can be categorized as nonrenewable and renewable resources. Nonrenewable resources are resources, such as coal, that when completely used, cannot be reproduced in a lifetime. Renewable resources are resources, such as trees, that can grow back in one lifetime. Capital resources are resources that are used to produce other goods. For example, the metal used to make cars are capital resources. Finally, human resources is the personnel who work to provide goods or services. A [|service] is something one person does for another person to improve that other person’s life. For example, a barber provides a service in that he/she cuts one’s hair.

Resources, goods and services are not distributed equally around the world. Instead some countries, such as the United States, are more fortunate than other countries, such as those known as “developing” countries. However, even more privileged countries cannot obtain all needed goods because of the scarcity of the goods or political issues that may affect the trade of the goods. Scarcity means something is in short supply. If a product is scarce and demand for that product increases, the price will increase as people are willing to pay more for the product, as has been the case for oil. [|Demand] represents how much a product or service is wanted. If demand is high for something, the price of that product will increase as well. If the demand for the product falls, the price of the product will go down.

Countries around the world import and export goods between each other. Imports are goods that enter a country from another country. Exports are goods produced by one country and shipped to another. A country gains a favorable balance of trade when it exports goods having more value than those it imports. For example, during the time period of exploration many European ships were sent to the New World or the Americas to set up colonies. These colonies produced raw goods that were then shipped back to Europe where they were made into finished products. Many of these products were then shipped back to the New World and sold. This system of production, which was known as the [|Colombian Exchange], created a favorable balance of trade for the mother countries since the value of the products returned to colonies was greater than those originally sent to the mother countries. Mercantilism and capitalism are two of the many important systems of economy that governments have set up in the past. [|Capitalism] is an economic system in which individuals and private businesses run most industries. In contrast, [|mercantilism] is an economic system in which the government controls all industries.

Economics is the basis of life for every human with any sense of survival. Whether you like it or not everything eventually boils down to money. Survival depends on the money people have. Everything costs money. Some people live on millions of dollars a day and others live on barely two dollars per day. As a whole we can improve the lives of every person starting with the economic issues in every country.


 * Created by Graham and Wooyoung on June 6, 2008**

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Bibliography

"04_28_4---Pile-of-Money_web.Jpg." Free Foto. 6 June 2008 <[]>.

Burstein, Stanley M., and Richard Shek. World History. Austin, Texas: Holt, Rinehart, Winston, 2006. Holt Online Text Book. 6 June 2008 <[]>.

"Indonesia.Jpg." Stanford. Stanford University. 6 June 2008 <[]>.