Econ sucks

I've decided that econ only makes sense when you apply its own internal logic; any attempt to apply outside logic to it just makes the whole thing collapse in on itself. Which starts to explain all those jokes about economists and crystal balls.

Take, for instance, a government incentive program to restrict supply. According to our textbook, such an incentive has to be large enough to compensate producers for the revenue they would get if they sold as much as they could produce profitably at the high price that a restricted supply creates. Which makes sense internally. But, see, the thing is -- without the incentive, they couldn't actually sell that much; people wouldn't buy it. So really, they're not losing out on anything except warehouses full of unsold widgets. They could be losing out on something -- if they can sell 4 widgets at $10, that's better than 2 at $15, even though they're getting a higher price per widget. But they're not losing out on selling all 6 widgets that they would like to produce at $15/widget, because if they actually sold 6 on the market, they'd only make $5 each.

Except in econ, where all $60 from the 4 they "don't get to sell" at $15 is counted as a loss.

*headdesk*

Econ sucks

I've decided that econ only makes sense when you apply its own internal logic; any attempt to apply outside logic to it just makes the whole thing collapse in on itself. Which starts to explain all those jokes about economists and crystal balls.

Take, for instance, a government incentive program to restrict supply. According to our textbook, such an incentive has to be large enough to compensate producers for the revenue they would get if they sold as much as they could produce profitably at the high price that a restricted supply creates. Which makes sense internally. But, see, the thing is -- without the incentive, they couldn't actually sell that much; people wouldn't buy it. So really, they're not losing out on anything except warehouses full of unsold widgets. They could be losing out on something -- if they can sell 4 widgets at $10, that's better than 2 at $15, even though they're getting a higher price per widget. But they're not losing out on selling all 6 widgets that they would like to produce at $15/widget, because if they actually sold 6 on the market, they'd only make $5 each.

Except in econ, where all $60 from the 4 they "don't get to sell" at $15 is counted as a loss.

*headdesk*