Theme Thursday - Equal

Well my week has been fulled with economics. It used to be my favourite subject. I Loved how an understanding of it gave insight into everyday things. It used to excite me, I'd tell people about the wisdom I'd just found or the links in everything. Cause when you boil everything down in a pot, almost everything is economics. Which can be summed up in the simple sentence "Economics is the study of people and how they use there limited resources to fulfill there unlimited needs and wants". That can be even further simplified into the sentence people respond to incentives.
Supply and Demand. The point at which people agree to purchase so much of a good or service and other people agree to produce that amount. When the supply is equal to the demand. The incentives could be the need to eat, money, clothing, anything. The point is in any given market there is equilibrium. The point at which everyone is happy! We have allocative efficiency as everyones surplus' are maximised.
This is a perfect market right? If only everything was this simple.
Its not, one person consuming one good might cause someone else pain. Think a drunk driver hitting another car. You now have an example of a negative externality of consumption for alcohol. Now an economist would tell you that any such good although it has negatives also has its positives and so a corrective tax should be placed not a total ban of the good.And we will have allocative efficiency again! Consumption of the good will fall until it equals the desired social quantity! The tax revenue can be used to fix the problem, reduce the number of drunk drivers.
If you understand that you could almost get 5 NCEA credits in NZ!

I hope nobodies been bored to death. I was working on an assignment pretty much all week and that's been the crux of it. Sigh, the boredom of assignments. -.-