Nick De Los Santos
CWID: A20317844
Professor Trost
EEE- 2083-30940
February 16, 2023
Module 03 Essay
Throughout the chapters that we were required to read, Bylund reviews the ideas of multiple aspects of society. He explains the overview of the economy, medium of exchange, production, equilibrium, disequilibrium, and how entrepreneurship ties into everything that makes the world go round. The book goes into these topics, breaks them down, and shows scenarios of how each takes on its role within the economy.
The How of the Market
The book's first chapter goes in-depth on the question "Does the market work?" and gives a firm understanding that the answer will be different most of the time. This is because everyone will answer according to what is beneficial to them at that point in time. If they are losing money or not benefiting from provenant businesses, why should they say the market is doing well? It is simple; they won't. In reality, it must be working, or else such a thing would not exist. Understanding the market means knowing that it runs essentially off us as a society. When we exchange goods with one another to gain what we want, that is how the market flows. There are often when we have voluntary exchanges, where both parties have something they both are eager to have and value highly. If we did not have the desire to exchange goods or desire to obtain a particular something, there would be no flow in the market, making it non-existent.
Capitalism– such that capitalist competition will "inevitably" lead to crisis.
Capitalism is defined as "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state." As Bylund stated in the book, capitalists can affect the market when one starts to overpower another by dominating the market. This is where the formation of monopolies comes into play, where they single-handedly defeat all market competition, causing it not to operate correctly. An example of a monopoly would be John D. Rockefeller (America's first billionaire), who owned up to ninety percent of the oil industry in the 1800s.
Moving forward, we reviewed that the market is built around society, but what exactly does that mean? From the entrepreneur's standpoint, the entrepreneur bases their business and ideas around the future rather than the now. The reason is that consumers desire products in the "now." So it is explained that if an entrepreneur were to make or discover an idea for a product now, they have to think and find ways to keep or make it relevant for the future. "Entrepreneurs choose the type of production that they judge has the greatest chance to meet the approval of consumers at the time it is finalized, and they, therefore, reap the reward of success (earn a profit) and take full responsibility if it fails ( suffer a loss of invested means)" ( Bylund, pg.6).
The other thing I would like to touch on is the idea of opportunity cost. Opportunity cost is the method where you lose out on one thing when you make the decision to go with an alternative choice. No day goes by where opportunity cost isn't in the works; it lives within our everyday lives. In this case, the opportunity cost an entrepreneur may encounter is the loss of money if they invest in materials for their product that may not be desirable in the near future. The key to success is producing a product that meets the consumer's valuable meter to engage in exchange for the product.
The Price Is Right
The answer is that there is no such thing as a "right" price. We could also say, which is equally accurate, that all prices are right. The reason for this is that goods and services offered for sale in the market do not have a single price, but many. This is easy to understand if we return to the discussion in chapter 1, where individuals exchange goods.
One thing to understand and know is that there is rarely a set and stone price within the market. Products within the market gain and lose value daily, and a few different things can cause this. Inflation, competition and temporary scales are all factors in why goods in the market fluctuate their prices.
Inflation: The general price levels of goods and services within a market increase.
Competition: two or more firms, each trying to get consumers to buy their goods.
Temporary Scales: The price range in a market of goods and services.
In conclusion, the market in the economy is based upon multiple factors and components. As stated early in writing, the market very much exists and is affecting lives daily. Entrepreneurs' careers go in the way the market is going in that particular time frame. That is why an entrepreneur needs to adapt on the fly and be innovative in times of need. This allows it to be difficult at times and will enable it to be beneficial, which is the reason entrepreneurs are known for taking risks in order to reach their goal(s).