5 Basic Principles of Economics

Thinking Like an Economist

Category: Thought-Provoking

  • “Experience is the hardest kind of teacher. It gives you the test first and the lesson afterward.”

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    This quote by Oscar Wilde offers a lesson to students who are bored by studying. You can complain that your teacher is world class, at curing insomnia. You can complain that the examples used in class were excellent, 50 years ago. You can complain that doing well on tests is irrelevant, since employers rarely ask…

  • 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.,…