Economy
Текст на Статията
- Пързалка: 1
- Yo mom, what's this soap that you gave me?
- I made it, why, you don't like it?
- Пързалка: 2
- I love it! It’s amazing, so soft, so smooth and its so fragrant. You should start selling these soap bars.
- And how exactly wouldI do that? I know nothing about economics. How would I ever start a business?
- Пързалка: 3
- Don’t worry about that, it’s really easy to understand and I am there for you.
- You will teach me how to start a business of my own? I have always wanted to have one, I am so proud of you.
- Пързалка: 4
- Be proud of me when you are rich and famous, but for now, I think you should start off by giving some of your soaps to your friends and asking them for their opinions.
- I am actually going to meet them right now so I shall give them the soaps.
- Пързалка: 5
- Yes please.Sure, why not?Definitely
- Hi guys. I made these soaps, would you all like some?
- Пързалка: 6
- The Next day
- Arnav, Arnav, my friends loved the soap! What’s next?
- That’s great. Now that you have have decided what goods you wi-
- Пързалка: 7
- What's a good?
- Ah yes, let’s catch you up on some of the basics of economics.
- Пързалка: 8
- A good is a product and a service is an act which you pay for, like teaching. A need is something you require to live, like food or water and a want is something you desire. Now wants are unlimited but the resources required to make them are still limited.
- What happens then?
- Пързалка: 9
- This causes something known as an economic problem which can be solved by the producer, someone who sells a good, or the consumer, the buyer of the good or service, by making a CHOICE. Either I buy an expensive phone and spend a lot of my money or buy a simple phone. Now, the option that I gave up on is called the opportunity cost.
- Well, I seem to have understood all this but what comes next?
- Пързалка: 10
- I think we should start by setting up a stall downstairs for your little business. But before that, you must understand what the basic economic questions are. They will help boost your business if you have a good understanding of it.
- I actually remember learning this long back. Uhh, Who, what, How. Something like this
- Пързалка: 11
- Well, we know what my product is and I will be making it for the general public cause everyone needs soaps. I even know how to make the soap as well but making a lot of them will be difficult.
- Yes, you’re right. You must first know WHAT you are going to sell. Then comes the question of WHO it is for. And lastly, HOW are you going to make it. It may take some time to answer all this but trust me, it will help you a lot.
- Пързалка: 12
- That’s when the four factors of production come in. I’ll explain more about that later but let’s focus on setting up your stall.
- Let's do it!
- Пързалка: 13
- Great!
- I love it!
- Hand-Made, Organic, Paraben Free Soaps
- Пързалка: 14
- One week later
- Well mom, your small business seems to be blowing up. A lot of people want your soaps.
- I know right, so many people are coming to my shop. I told my friends to spread a word about my soaps and everyone wants one now. What do you think is the next step forward?
- Пързалка: 15
- Sure, I’m looking forward to this.
- I want you to try something out, why don’t you increase the price of each bar from 150 to 200 rupees. Tell me what you notice.
- Пързалка: 16
- The Next Day
- Well, did you see any changes?
- Yes, bad ones. It was fairly disappointing because comparatively fewer people came today. Why did that happen?
- Пързалка: 17
- It’s actually very simple, it's called the demand curve. Since you increased the price of the bars, fewer people wanted to buy it. So higher the price, fewer the bars sold but if you decrease the price, more people will want to buy the bars.
- That’s a relief, I thought people stopped liking the bars. This is actually very interesting.
- Пързалка: 18
- Like the demand curve, there is something known as the supply curve. The demand curve is affected by the consumers whereas the producers are responsible for the supply curve.
- Let me guess, in the supply curve, the producers make fewer quantities of goods when the prices are low because they get lesser income.
- Пързалка: 19
- That's actually right, let me draw the two graphs for you
- Demand Curve
- Supply Curve
- Price
- Price
- Quantity
- Quantity
- Пързалка: 20
- Now, let me show you something cool. Let’s combine these two graphs.
- Supply Curve
- Surplus
- Equilibrium
- Price
- Demand Curve
- Shortage
- Quantity
- Пързалка: 21
- As you can see, at lower prices, there is more DEMAND for the good but there is lesser SUPPLY. This is called shortage.
- Oh and when the prices are higher, there is more production but less demand. So there is an excess of goods. It makes a lot of sense.
- Пързалка: 22
- Yes and when the two lines meet, it's called the equilibrium. That’s the price you want as a producer and as a consumer. So I think you should experiment a little with the prices until you find the perfect rate.
- That's a great idea.
- Пързалка: 23
- One Week Later
- I think i found the perfect price for my soap, there is a lot of demand and I am also making profits. This is going great.
- Good for you mom! I think it’s time you take a step further. Why don’t you start selling your soaps on Amazon. You can put a poster on your stall stating that your soaps are now on Amazon too.
- Пързалка: 24
- That’s a great idea. I will surely do that.
- You're going to be famous mom!
- Пързалка: 25
- A few days later
- Wow, I am getting a lot of orders from amazon and loads of people are buying the soaps from the stall. I don’t think I can make so many of these bars.
- Well, no problem, remember when I was telling you something about the four factors of production. This is where they come in handy.
- Пързалка: 26
- First we have land. It includes two things, the land itself which you can buy to set up a factory. And the natural resources you can collect from that land. To start off small, you can turn the extra room, which is also considered land, into a makeshift factory to work and produce more bars.
- Mhmm, makes sense.
- Пързалка: 27
- Then we have labor which, as the name suggests, are the employees and workers working at the company. Third is the capital which includes the machinery and tools required. You may need a worker or two but no machines are necessary as of now.
- Yes, I will be needing some assistance.
- Пързалка: 28
- And finally, there is entrepreneurship. In simple words, it means combining the other three factors to make profits.
- Well, that's what I will be doing, right?
- Пързалка: 29
- Yes, that’s what you will be doing but now, you should search for hiring some people to help you.
- My friends actually suggested that they come and work with me. They seem to be as excited as I am.
- Пързалка: 30
- Good, Good. This comes a lot later but I think I can teach you about the four sectors of economy as well.
- Now what’s that?
- Пързалка: 31
- Well, there is primary, secondary, tertiary and quaternary. Primary sector includes natural resources like wood and agriculture. Secondary sector is the manufacturing of the goods. Tertiary sector is the sale of those products and the last sector includes human skills (services).
- Then my business would include the first 3 sectors if I am not wrong, because I am using the natural resources, manufacturing the products and selling them as well.
- Пързалка: 32
- It won’t be the 1st sector actually because you aren’t selling the natural resources directly but using them for your product. You are right about the other two though.
- That makes sense, I should have thought of that. Is there anything else left to understand?
- Пързалка: 33
- Well yes. One more thing you need to know about are the economic systems. There are 4 of them.
- Ok go ahead. What are they?
- Пързалка: 35
- An economic system is how the government is involved in the country's economy. Pure Market Economy is when there is no government intervention, whereas pure command economy is the complete opposite. All companies are owned by the government and the profits made by the company go straight to the government.
- Ok ok, which one does India follow?
- Пързалка: 36
- India? It follows a mixed economy along with a lot of other countries. Mixed economy is when there is some government intervention, so only specific companies are under the government command. Finally, there is the traditional economy, which in simple words are economies shaped largely by religion. Hope you understood everything.
- Yes, well, that’s it. I mean I thought there is a lot more complicated stuff behind economy.
- Пързалка: 37
- Yes I mean there is, but these are just the basics and you will learn more as your business grows!
- Пързалка: 38
- Wow mom, I heard you made it in the top 100 MSME companies in India.
- Yes. All thanks to you! I am so proud of you. I remember that day when I had just started my business and you told me that I should be proud of you when I am rich and famous. and here I am, here we are.
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