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The Million Dollar Question

August 11th, 2011. Chiba, Japan.

A mix of confusion and awe as I step off the platform.

I must have made a mistake. But maybe a good mistake.

Birds caw and cicadas click gently, filling the warm afternoon air with sounds of nature. The train platform is open to the air and on the other side of the tracks is a high fence. Beyond it, a bicycle and walking path leading to a park.

Children are running around and playing in the park, but surprisingly quietly. Very Japanese.

6 Things That Encapsulates Microeconomics

On Econoception

Ever wondered why supermarkets not only stock up on groceries and household items but also sell contact lenses and plasma TVs these days? Can you explain why local petrol stations lowered prices twice in a day? Do you know the rationale behind charging different transport fares for different groups of consumers? (i.e. student pricing and senior citizen pricing)

If you are keen to find out the answers to the questions above, you are in for an adventure. As you find out more about Microeconomics, the reasons driving the behaviour of the above-mentioned firms will jump out at you. I shall begin this series with a list of 6 things that to me encapsulates microeconomics (at least at the H2 syllabus level).

Microeconomics is about individuals making decisions that impacts the outcomes in different markets. Equilibrium price and equilibrium quantity are two of the many things that economists are interested to find out with regard to the outcomes of markets.

There are three types of markets in the economy, the goods and services market, where most of the transactions in the economy take place, the labour market, which matches workers to employers and lastly the financial market, where loans take place and redistribution of risk happens.

The three types of markets are in general characterised by similar principles, but each is inflicted with its own set of problems and issues. In the H2 syllabus, the focus is on the goods and services market.

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