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Mathematics, like every other branch of subjects, is ingrained into economics too. In fact, many large-scale concepts and principles can be well explained with this. Let's explore it briefly in today's blog. Mathematical economics is a branch of economics that mainly relies on mathematical models and methods to analyze economic problems and derive solutions. A range of techniques like calculus, linear algebra, matrices, graphs etc, is employed in them. You may already saw in previous blogs how we tend to use some maths to explain a theory or topic. It's main goal is to represent economic theories and relationships in a formal and mathematical way. This allows economists to analyze economic behavior, make predictions, and develop policies more rigorously and systematically. If you grasp it well, you can derive precise, quantitative predictions about how individuals, firms, and governments will respond to changes in economic conditions, policies, and other factors. It can be ...

We all know the concept of inflation and its impact, but have you thought about its opposite - deflation? Hilarious as it sounds, this concept also exists as daylight in the economy. Let's delve deeper into it today. Deflation is basically just the opposite of Inflation - a situation where consumers expect prices to fall further in the future. It may feel good in short run, but in reality deflation has more dire consequences compared to inflation. People may delay buying goods and services because they anticipate that they'll be cheaper if they wait. If you expect the price of electronics to drop next month, you might hold off on buying that new IPhone now. When consumers delay spending, it can lead to a decrease in overall demand for goods and services. This reduction in demand can result in lower production levels and job cuts, affecting the overall economy. There's a term called Deflationary Spiral, a particularly concerning scenario where falling prices lead to falling ...

Who doesn't know inflation? At least if not the term, you all surely know how the prices of everything increase day by day, year by year! Perhaps the greatest nightmare of every breadwinner. Let's delve deep into the concept of Inflation in the light of economics today. Inflation is a general rise in the prices of goods and services over time. Many things are responsible for it. For the sake of simplicity, we shall see the 3 key factors behind this phenomenon. A) Demand-Pull Inflation: When demand for goods and services is higher than what the economy can produce, businesses raise prices. Think of it as a lot of people chasing too few goods. Imagine everyone suddenly wants the latest IPhone 15! Retailers can't keep up with the demand, so they raise prices because they know people are willing to pay more. And as prices go up, the purchasing power of money decreases. This means you need more money to buy the same things you used to buy for less. B) Cost-Push Inflation: When t...

Today's writing is a bit longer, but quite important, so brace yourself and read patiently. 😀 Demography in Economics is another aspect we shall learn in today's blog to understand an economy in a whole. This is the study of human populations and their characteristics, involving various statistical data related to population dynamics, eg. birth and death rates, age structure, geography, timelines etc. The field of demography is closely linked to economics because population trends and dynamics significantly influence economic development, resource allocation, labor markets, and social welfare. Let's see some key aspects of demography in economics: 1. Population Growth: Demography helps to examine the growth or decline of populations. It affects economic variables like labor supply, demand for goods and services and the overall size of the market. Rapid population growth can present challenges like high unemployment rates and strain on public resources. But slow population ...

Elasticity is one of the very basic concept of Economics and helps to understand how consumers (also called buyers) and producers (also called sellers) react to price changes, making it a crucial concept for pricing strategies and understanding how an economy behave. There are various types of elasticity, but for now we'll see the price one, having two main types: price elasticity of demand and price elasticity of supply. Price elasticity of demand is how much people change the amount they want to buy when the price changes. If something is "elastic," people are very sensitive to the price, so if the price of that item goes up, they'll buy less of it or look for alternatives that cost lesser. And if it's "inelastic," people will still buy the same amount no matter how much the price changes. A good example of inelasticity is medicines. Doesn't matter their prices go up or down, you'll still need to buy to save your health! Now, for elastic demand...

Imagine you have some dollars and you want to buy a subscription service with them. You like to buy maybe Netflix or Spotify or anything you wish. For simplicity, let's consider the two options Netflix and Spotify, both which you love to get. But here's the thing: you only have enough dollars to buy one subscription at present time. So, you have to make a choice between either Netflix or Spotify. The opportunity cost is the one that you didn't choose to buy, the one that you gave up when you decided to buy the other. So, if you choose to buy Netflix, the opportunity cost is Spotify because you can't buy it anymore. Opportunity cost is the fundamental economic concept of the value of the next best alternative forgone when making a choice. It highlights the inherent trade-offs individuals, businesses, and societies face when allocating scarce resources among competing uses. When making decisions, there are always multiple options available. But sometimes due to limited re...

Today's blog is pretty straightforward as its title. Seasonal demand refers to the pattern of consumer demand for goods or services that occurs in a cyclical manner over a specific period of time, such as days, weeks, or months. This phenomenon is often influenced by factors such as weather conditions, public holidays, cultural events, and seasonal traditions. Let's assume, you're looking for hoodies made of wool, but would you look for them during summer? Naturally no, even if they're available to buy, you don't need them in that season. Rather you'll buy it in winter. Similarly, let's say you need some sunscreen to protect from sun rays. Which season you'll look for it most? The obvious answer is summer! Or for example, during Christmas you tend to buy gifts for your family, so your demand for the gift items will increase during the entire Christmas week. Similarly during Eid, the demand for savory food items are more demanded due to the traditions ass...

Suppose you have a piece of your favourite food, like a slice of pizza or a delicious Whopper from Burger King. You've already eaten 5 slices or 3 Whoppers by now. Now, imagine having another slice of pizza or another Whopper. Would it taste just as good as the previous ones? Maybe not. You might still enjoy it, but maybe not as much. Your stomach is already full, how'd you even stuff further? Or eventually you might feel full or even sick of it, and the enjoyment you get from each slice or bite will decrease. That's because you've already satisfied your hunger and don't need any more food. This is what we call "marginal utility." Total utility is the satisfaction you get from anything, and Marginal utility is the concept of the extra satisfaction or pleasure that we get from consuming one more unit of anything. Not necessarily it has to be food, it can be any material! The graph of marginal utility is usually downward sloping, as the quantity of a good co...

Before I go on with the Demand, an urgent break! There's one topic we shall learn if we actually start Economics from scratch. That is, the Ten Principles of Economics! Economics is often seen as a daunting and confusing subject, only for those with an advanced degree or who are mathematically inclined. But in reality, economics is not some abstract and alien discipline that is removed from our daily lives! It's a fundamental part of how we make decisions and interact with the world around us. From the choices we make about what to buy and where to work, to the policies our governments enact and how we trade with other countries, economics is at the heart of it all. Every day we are confronted with trade-offs and incentives, and we are constantly making decisions based on what we believe will give us the best outcomes. So let's start today's episode with the very basic starting concept of Economics. The ten principles of economics are often attributed to renowned econom...

The demand curve shows the concept of quantity demanded in a graphical way. The demand curve can be drawn for many other purposes too, but in this blog we shall see for quantity demanded only. It is a straight line that starts high (where the price is high) and goes down (where the price gets lower). That's because when the price is high, the quantity is demanded lower. The opposite of it is also true. When the price gets lower, people want to buy in more quantity as they find it a better deal. So the price and quantity have an inverse relationship, and the slope of this curve is typically downwards. Let's assume this market of seaweed (a famous savoury) below- Price in Dollar (P) Quantity Demanded (Q) 10 10 20 8 30 6 40 4 50 2 The demand curve of it will look like this- Here, at a price of $10, consumers are willing to purchase 10 units of seaweed, but when the price increases to $20, the quantity demanded decreases to 8 units. As the price continues to increase to $30, the ...

"Quantity demanded" is a term that we use to describe how much of something people want to buy at a certain price. For example, let's say you really like lemons, and you're willing to pay 10 cents for one lemon, buying a total amount of 5. The quantity demanded of lemons at that price (10 cents), would be the number of lemons  (5, as in this example)  that you and other people would want to buy at that price. Now, if the price goes up to $1, you might not want to buy as many lemons anymore, and neither would other people. You may get only one instead of five. So, the quantity demanded would go down. And if the price dropped to 5 cents, you might want to buy more lemons, say 10, and so would other people. In that case, the quantity demanded would go up. So, quantity demanded is just a way to talk about how much of something people want to buy at different prices.

Some basics of how the aggregate demand is affected in an economy. Each part coming soon! 💜💚💙 For understanding the concept of demand, read this-  What is Demand?

"Demand" is a word to describe how much people want or need something. Let's say you love ice cream and want to buy some. If there are lots of other kids who also want ice cream, then the demand for ice cream is high. But if nobody wants it, then the demand is low. In an economy, people buy things they need or want with their money. The more people want or need, the higher the demand for it will be. And when there is a high demand, that usually means it will cost more money to buy as there are only a limited amount of resources (like milk, sugar, and time) to make it. So, demand is important as it helps determine the prices of things we buy and sell in an economy. You can watch this reel for a better understanding of this concept.

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