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Thread: Economics 101

  1. #31
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by untypable View Post
    What do you think are their reasons for company failure , lack of understanding of the market?
    I don't think this is a particular mystery - all companies progress towards zero economic profit. That means that every company is always at the razor's edge of being destroyed.

    That's an oversimplification as it has a bunch of assumptions built in - competition, etc. - but it more or less states that every company needs to constantly improve, find customers, weather losses and so forth. To be competitive, it needs to be right on the edge of destruction.

    To see how true this is, I recommend Industry Canada. It's difficult to work with at first but has a ton of data and information. (Build your own profile -> 2004 link -> <leave as is and click 'Continue'> -> sort through the data you want)

    How hard you work had no relation to how much money you make. How much you make i think depends on how much the market pays you i think.
    The amount you make per unit of time doesn't adjust much for how hard you work (it does some, normally)... but the harder you work, the more you earn in aggragate. However, you are bracketed in what the market will pay you. That is, if you make (your example) toy dragons that no one wants, working hard will mean you make more of them: even a small proft would become larger... but in the end, it wouldn't be a terribly good return.

    The same goes for accumulation - work a cent under expenses, and you grow poorer everyday. Work a cent over, and you grow richer.

    And I don't want to be the top 10 -20%, but i want to know how the economic system works and how wealth can be accumulated.
    The two are entirely different. Knowing how the economic system works is handy, but it's an academic profession that watches the actors who know how to work within the system. It's like asking a sports commentator how to improve a sports team. They'll have lots of opinions and can even be right, but they never played - they don't have the natural ability or talents that is required to be a player.

    Useful, but generally descriptive. If you don't want to be in the top 20%, then you can simply save about 10% of your income over the better part of 30 years and you'll certainly fall in the 20-40% category.

    The reason for most business failure is that they do not know how to find customers. There are millions of business competing against each other, what can make your business stand out?
    True, but that's like saying that a sports player doesn't know how to score, then asking how they can let their team score. The answers are as varied as life is.

    Well it depends on what you planned to do with the saved money. Most people plan to spend it on something later on, which is a way of losing it. It is a matter of losing it more quickly or slowly. Most people do not know how to accumulate money other than income ftrom the boss and bank savings interest.
    You don't lose it - you trade it. A company "loses" money when it buys inventory to sell, or it "loses" money when you pay your employees. Having money for money sake serves no purpose.

    There is nothing wrong with working and saving. It's safer, easier and less work than starting your own business/etc. If you don't love the game, it's really not worth it.

  2. #32
    Alexander the Terrible yenom's Avatar
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    Well uyea, then how do you trade money for more money. or things that generate profits?

    because when you trade money for a non-money thing, this is considered a "loss".
    Adding to this, everyone's daliy consumption such as food, liquid and gas heating cost money. Trading money for these things are necessary for survival.

    The amount you make per unit of time doesn't adjust much for how hard you work (it does some, normally)... but the harder you work, the more you earn in aggragate. However, you are bracketed in what the market will pay you. That is, if you make (your example) toy dragons that no one wants, working hard will mean you make more of them: even a small proft would become larger... but in the end, it wouldn't be a terribly good return.
    good point, then how do you increase the amount you make per unit time?
    Or how does some people have income without working?

    The most important thing I want to say is; Instead of eating away your own wealth, can a person uses his wealth to create more wealth? How does a person do this?

    Can you use money to buy something that gives you more money. Other than that, i do not see how people can get rich.
    The fear of poverty turns people into slaves of money.

    "In this Caesar there are many Mariuses"~Sulla

    Conquer your inner demons first before you conquer the world.

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