A Picture of price and markets

We can picture the circular flow of economic life in the picture above. The diagram provides an overview of how consumers and producers interact to determine prices and quantities for both inputs and outputs. Note the two different kinds of markets in the circular flow at the top are the product markets,or the flow of outputs like pizza and shoes, at the bottom are the markets for inputs or factors of production like land and labor. Further, See how decisions are made by two different entities ,consumers and business.
Consumers buy good and sell factors of production, Business sell goods and buy factors of production. Consumers use their income from the sale of labor and property. Price in good markets are set to balance consumer demand with business supply; Price in factor markets are set to balance household supply with business demand.
All this sounds complicated. But it is simply the total picture of the intricate web of interdependent supplies and demands, Interconected through a market mechanism to solve the economic problems of what how and for whom. Look at the picture carefully.a few minutes spent studying it will surely help you understand the working of market economy

Market equilibrium

At every moment, some people are buying while the others are selling firms are inventing new products while governments are passing laws to regulate old ones; foreign companies are opening plants in America while American firms are selling their product abroad. Yet in the midst of all this turmoil, Markets are constantly solving the what, how, And for whom. As they balance all the forces operating on the economy, Markets are finding a market equilibrium of supply and demand.
A market equilibrium represents a balance among all the buyers and sellers. Depending upon the price, household and form all want to buy or sell different quantities. the market finds the equilibrium price that simultaneously meets the desire of buyers and sellers. Too high a price would mean a glut of goods with too much output; too low a price would produce long lines in stores and a deficiency of goods. those prices for which buyers desire to buy exactly the quantity that seller desire to sell yield on equilibrium, of supply and demand.

Three problems of economic organization

Every human society, wether it is an advanced industrial nation. A certainly planned economy ,or an isolated tribal nation must confront and resolve 3 fundamental economic problems. Every society must have a way of determining what commodities are produced, how these goods are made and for whom they are produced. Indeed these three fundamental questions of economic organization what, how ,and for whom are crucial today as they were at the dawn of human civilization.
To answer that three questions , Every society must make choices about the economy input and output .Input are commodities or services that are used to produce goods ,And outputs are the various useful goods or service that result from the production process and are either consumed or employed in further production.
Another term for input is factor of production. These can be classified into the broad categories, Such as: Land, Labor, Capital
Restating the 3 economic problems in term of input an outputs, A society must decide(1)what output produce, And in what quantity (2)How to produce them that is, By what techniques inputs should be combined to produced the desire outputs, and (3) For whom the outputs should be produced and distributed.

Microeconomic and Macroeconomic

Okey let’s start our lesson economy is divided into 2 different approach in the macroeconomic & microekonomi.two approach based on modern economic theory.
Adam Smith is usually considered the founder of the field micro economics,The branch of economics wich today is concerned with the behavior of individual entities such as markets,firms,and household.In the Wealth of nations(1776),Smith considered how individualprice are set,studied the determination of price of land,labour,and capital,and inquired into the strength and weaknesses o0f the market mechanism.Most important,He identified the remarkable efficiency properties of markets and saw that economic benefit comes from the self.Interested actions of individuals ,These remain important issues today,And while the study of micro economics has surely advanced greatly since Since Smith day, he is still cited by politicians and Economics alike.
The other major branch of economic subject is Macro economics,Wich is concerned with the overall performance of the economy.Macro economy didn’t even exist in it’s modern form until 1936,when Keynes publish his general theory of employment interest and in general theory of employment interest and money.At the time ,England and United States were still stuck in the great depression of the 1930s.With over one-quarter of the American labor force unemployed .In his new theory Keynes developed an analysis of what causes business cycles,with alternating spells of high unemployment and high inflation.Today macroeconomics examines a wide variety of areas,such as how total investment and consumption are determined,how central bank manage money and interest rates,What causes international financial crisis,And why some nations grow rapidly while other stagnanate.Although macroeconomics has progressed far since his first in sights,The issues addressed by Keynes still define the study of macroeconomics today.
The two braches-microeconomics and macroeconomics converge to form the core of modern economics.

economy-ism introducing

halo this is my first blog in wich there are several economic articles.I hope this blog can help you for studying an economic lesson.there is several topic wich I try to tell& discuss in this blog as microeconomic,macroeconomics and also capital market and portopholio here.I hope this blog can be useful for you for studying economy lesson.only that i want to write and see you soon on my articles of economy next.