WTF is Economics

In order to understand business at a deep level, first we need to understand something much bigger: the economy.

But economics has a lot of weird lingo around it and can be kind of daunting at first. So before we learn all that...

What even IS economics?

According to OpenStax, economics at its core answers one problem: the problem of scarcity.

"human wants for goods and services exceed the available supply”,

They go on to say that modern economy uses a division of labor to answer this problem.

From there, the study is split into two core groups: microeconomics and macroeconomics.

Microeconomics specializes in how individuals, firms, and industries interact with scarcity, and it looks especially at consumer behavior.

Macroeconomics on the other hand, concentrates on broader economics forces. Things like standard of living, unemployment, and inflation. Macroeconomic policies can be sorted into two camps: monetary policy and fiscal policy. Both are important, and we’ll talk about both extensively in later entries.

Naval Ravikant argues microeconomics is more tactical than macroeconomics, as it is more informative for business owners to alter their behavior. He says "there is no skill called business. Avoid business magazines and business class, study microeconomics, game theory, psychology, persuasion, ethics, mathematics and computers.” (Nav.al/love-read)

It seems both are essential in developing a deep knowledge of business and business systems, but microeconomics may be more useful in informing behavior than macroeconomics. Both will be covered here in Project Archive, but I expect that understanding buyer behavior and local business systems will be absolutely critical.

This entry will be updated and improved over time.