Posted in History & Literature

Demand And Supply

How does the economy function? On the surface, economics seems extremely complex and intricate, changing dynamically due to what appear to be insignificant factors. For example, one can predict a recession from the increasing attractiveness of waitresses. But economics relies largely on two simple laws: the law of demand and the law of supply.

The law of demand states that as the price of a good goes up, people demand less quantities of that good. This makes logical sense as (rational) consumers want to spend the least amount of money possible for something. When plotted on a graph with price (P) as the y-axis and quantity (Q) as the x-asis, we can show that demand (D) is a downward-sloping curve.

The law of supply states that as the price of a good goes up, people supply more quantities of that good. This makes logical sense as (rational) producers want to sell something for as much money as they can. When plotted on a graph with price (P) as the y-axis and quantity (Q) as the x-asis, we can show that demand (S) is a upward-sloping curve.

When we superimpose these two laws on the same graph, we get a nice X-shape as the two lines cross over. The point where they cross is called the market equilibrium and this is where the consumers demand exactly the right amount of goods that the producers are willing to supply at a given price. If a good is being sold at a price higher than the equilibrium price, consumers demand less of the good and producers are left with an excess. If the price is lower, then there is a shortage as demand exceeds supply. Over time, the price is pushed towards the market equilibrium. Thus, thanks to the laws of supply and demand, the market automatically adjusts to the price to accurately reflect the value of the good.

Adam Smith, the father of economics, called this the invisible hand – a force driven by the individual ambitions of consumers and producers to balance the market. This force is not found in centrally planned economies of communist states, as the price and quantity supplied is fixed by the government. A pure free market is only driven by the invisible hand. Most modern countries’ economies are mixed economies, usually in the form of free markets with some government intervention.

Although economics appears complicated, it essentially boils down to the laws of supply and demand. By understanding the principles of demand and supply, one can begin to understand more complicated economic theories such as aggregate demand and supply, elasticity, foreign currency exchange and trade. Real economic situations such as oil cartels, trade embargos and taxation can be broken down and modelled using PQ-diagrams (depicting the demand and supply curves).

The laws of supply and demand are two crucial laws of economics that everyone should have some understanding of, as it can be extremely useful in everyday life. Not only do they apply in obvious situations such as running a store or a business, or understanding how the economy works, but it can be applied to negotiating too. One of the fundamental principles of negotiating is finding the balance between what one person wants (demand) and what the other person is willing to do (supply). It is amazing how useful knowing that simply being slightly flexible is in negotiations.

Posted in Life & Happiness

Possimpible

Have you ever had a moment when something so unbelievable, so improbable that you never would have imagined it would happen, happened? When something you could only dream of actually happened in real life? When something so impossible that you must have stepped into a parallel universe for that thing to happen? The feeling that such a moment brings is indescribable.

Success is not about money and power. Success is not a product of luck. To become successful, one must change their state of mind first. The most crucial thing to understand is that the only limit is that there are no limits. Only when you dare to go past what is possible will you attain anything worthwhile. “To the impossible?” you may ask. No, true success lies beyond the impossible. A place where the possible and the impossible meet to become: the possimpible. Only when you have become the master of the possimpible will you be able to confidently say that you have succeeded in life.

Nothing, and everything is possimpible. 


Posted in Psychology & Medicine

Emotion

Unless you are a psychopath, as a human being you are bound to feel emotions. Love, happiness, anger, sadness… there are many emotions that range from simple to complex. Emotions are an interesting system as they allow us to respond rapidly to a situation without thinking, while alerting other members of our society to what is happening to us. Essentially, emotions help us in survival and social interactions. 

According to Professor Paul Ekman, emotions are universal from culture to culture, with facial expressions being almost identical from tribal cultures to modern ones. He found that there are six major emotions: anger, fear, disgust, sadness, surprise and happiness. He also pioneered the field of micro-expressions, which studies the flickering change in our facial expressions whenever we feel a certain emotion. As emotions usually occur before the conscious mind thinks, we are often unaware of the expressions we make.

Another psychologist, Dr. Paul Gilbert, divided emotions into three affect systems. They are as follows:

  • Threat/protection system: associated with the fight-or-flight response, activates in response to danger. It causes anger and fear and is related to catecholamines (e.g. adrenaline) and cortisol (stress hormone).
  • Want/desire system: associated with hunting and rewarding behaviour, helps us perform actions that aids survival such as obtaining food and mates. It is related to the emotion of excitement, which is caused by the neurotransmitter dopamine (part of the reward system).
  • Contentment system: associated with met needs and social connection, especially when we feel safe and relaxed. It produces feelings of happiness and peace, linked to the hormone oxytocin (released with human touch, especially during kissing).

Dr. Gilbert also posited that as societies have evolved over time, our affect systems have been altered. For example, despite the lack of natural predators around, urban dwellers are often in a state of high anxiety. This causes a sustained stress response, leading to negative health outcomes. Furthermore, the agitation and the paranoia caused by constant fear leads to crimes such as murder and war. Our want/desire system has also been heightened as we find pleasure in gaining material wealth. This has led to aggressive capitalism, exploiting other people and the environment for selfish gain.

On the other hand, the contentment system has shrunk. People feel less content despite being in a generally healthier and richer world than 100 years ago. The reason being, our brain has evolved to help us survive, not to keep us happy. 

One must learn how to adapt to these changes by finding a way to relieve tension and stress, while finding inner peace and happiness. Whether it be through sports, music, humour or simply talking to another person, finding your own way to deal with anxiety is the best road to being happy and content.

Posted in History & Literature

Land

The following is the synopsis of a short story called How Much Land Does a Man Need?, written by the famous Russian author Leo Tolstoy.

A peasant man called Pahom was complaining of how he did not possess enough land to satisfy him. He lamented: “If I had plenty of land, I should not fear the Devil himself”. The Devil, hiding behind the stove and listening to this, decided to have a tussle with Pahom to teach him a lesson.

The next day, a lady in the village sold her estate, which was bought up by the peasants. Pahom too tried to buy as much land as possible and by utilising the land he pays off his debts and he leads a happier life. But despite having his wish granted, he was still not satisfied and desired more land. His obsession with his land began to cause troubles with his neighbours and he eventually moved to a larger area of land at another village.

However, he was annoyed that he was growing crop on rented land and wanted more land for himself. He found out that the Bashkirs in the village were simple-minded people with large amounts of land. Pahom decided to exploit the Bashkirs and went to them to negotiate the lowest price possible for their land. The Bashkirs counteroffered with a very strange deal: for a thousand rubles, they would let Pahom take a spade to mark out an area of land and claim it for himself. The only condition was that he had to come back to where he started to close the loop by sunset. Pahom joyfully took up the offer, thinking how stupid these people were.

That night, Pahom had a surreal dream where he saw himself lying at the feet of the Devil. The Devil was laughing maniacally over Pahom’s cold, dead body. After jerking awake from this nightmare, Pahom sets out to start marking out as much land as possible. He decides to travel as far as he can to maximise his gain. However, he forgets to take into account the time needed to come back to where he started and hurries back. Although he manages to close the loop by sunset, the exhaustion causes him to drop dead on the spot. He is buried in a hole measuring 6 feet long.

How much more land does a man need than a place where he can rest in peace?


Posted in Psychology & Medicine

Cognitive Dissonance

When two conflicting ideas exist at the same time in the human mind, it causes uneasiness and discomfort. Human beings instinctively tried to reduce the dissonance, most easily achieved by adaptation and blaming. For example, when a person wants something strongly but cannot attain it, they choose to believe that they do not want it any longer, discarding one idea to dissolve the dissonance.

A famous portrayal of this condition is Aesop’s fable The Fox and the Grapes, which goes as following:

A fox sees a grape on a tree and wants to eat it. However, the grape is too high up, so the fox says “That grape is surely sour.” and turns away.

This fable shows the classic pattern of: Wants something -> finds it unattainable
-> criticises it to reduce their want, and ultimately the dissonance caused by it.

This effect is quite powerful and explains many of mankind’s unique behaviours. As stated above, people try to reduce the dissonance by justification, denial and even blaming a third party to ease their mind.
Interestingly, the act of “justification” is brought on by another human feature: arrogance. Most people consider themselves intelligent and always making the right decisions, ergo when they make a mistake it conflicts with their self-image. Instead of accepting that they made a mistake (thus altering their image), they instead believe that they intended that action. This belief is so strong that they do not even know the justification happened subconsciously.

For example, there is a phenomenon called buyer’s remorse, where a buyer finds a flaw or a better product after buying something, feeling remorse (which is due to the discomfort caused by cognitive dissonance). Instead of blaming themselves, people will justify their reasons for buying that product, and paradoxically value that item even more. This shows how cognitive dissonance can be seen everywhere in everyday life.

In short, people cannot accept paradoxes, believe they always make the right decisions, and twist reality and make excuses when it does not fit what they desire. People are fascinating.