5 Basic Principles of Economics

Thinking Like an Economist

Author: PA

  • Market Control: How Barriers Impact Prices

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    Some economic discussions start by assuming that the market in question is perfectly (or almost perfectly) competitive. Other discussions start by assuming that a firm is mostly monopolistic. Understanding the difference matters, for several reasons. There are examples of monopolists and of cartel agreements [1] [2] [3]. Other investigations are on-going while politicians ask for…

  • Understanding a Market Equilibrium: Challenges for Restaurants

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    Something seems to be happening in the US restaurant market. Lots of well-known chains are closing “under-performing” locations while others are asking for bankruptcy protection. [1] [2] [3] Even in Canada, some news items talk about restaurants offering discounts to “bring customers back” because “eating out is expensive”. This post notes that change is common…

  • Making Sense of Numbers: Practical Comparisons

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    Many people who want to study economics get confused about the scale of numbers. Understanding the scale of a number adds context and invites comparisons, which leads to the question “does it make a difference?”. Understanding scale may seem like a mathy thing, but it is really about communication. This post is motivated by a…

  • The Challenges and Opportunities of using GenAI: Business and Education

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    Generative Artificial Intelligence (GenAI) is a very impressive general purpose technology: it can write poetry, recipes, cover letters for jobs and (after several suggestions were rejected) these images. The people who developed the foundations were recently recognized with a Nobel Prize. Every new and old business seems to claim that it is using AI: e.g.,…

  • Retail Sales in Canada: Benchmarks

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    Statistics Canada recently announced that Canadians spent about $66,000,000,000 at retail stores in July. What does that mean? One of the challenges with studying economics is that people quote numbers even if the audience has trouble with the context. This lack of context is especially evident in media reports which shift between related-but-different measures (e.g.,…

  • Predicting an Election (Stock Market)

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    On Tuesday night, two US politicians will talk and then some media experts will talk about what the politicians talked about. Polls suggest that the country is nearly split 50/50 about which politician is preferred. For media companies, that is great news: they can say “Stay tuned for the latest news on this small but…