“There is no such thing as a free lunch.” When someone offers me free lunch, I now understand that the lunch may not cost me any money but that someone else produced the ingredients, transported them to the store, and paid for them. Economics is the study of how goods and services are produced, distributed and utilized. In The Wealth of Nations, Adam Smith wrote that the sole motivator of man is self-interest. My self-interest is active when I buy shoes, develop my talents, and participate in our economy.
Last week I bought a pair of shoes at the Short Hills Mall. The production, distribution, and sale of shoes are a prime example of division of labor. Companies manufacture these shoes. These companies utilize the division of labor. In these companies, there is a specific job for a person or a group of people. The division of labor is defined as the separation of a work process into a number of tasks, with each task performed by a separate person or group of people. It is most often applied to systems of mass production and is one of the basic organizing principles of the assembly line. Splitting up work into simple, repetitive tasks eliminate unnecessary motion and limit the handling of different tools and parts. This is related to the example above; where the production, distribution, and sale of shoes are separate tasks in the separation of a work process. Another example of division of labor is: two people are assigned to wash the dishes. One person has their own task for themselves. One person washes the dishes while the other person dries them. As you can see, these two people have their own task that they were assigned to, just as companies. One last example of scarcity is: if we all grow our own wheat, and then all mill our own wheat, and then all bake our own bread, each one of us is going to need land, farming equipment, a mill, baking facilities and a lot of different expertise.
Instead, you could only grow wheat, I could mill all the wheat, and the third person could do all the baking. The purpose and advantage of this entire system is so that we do not have the burden of doing all of these other jobs instead of doing one; and potentially increasing our skill at the one particular bit of work that we’re concentrating on. Scarcity of designer clothes determines the price of the clothes. Opportunity costs help determine which stores we visit and where we spend our money. We are making economic choices every single day. We have to decide whether catching that worm is worth sacrificing sleep to wake up before all the other birds in the morning. The bottom line is the intersection of all lines.
Last year, I bought a pair of Uggs boots at the store. When I went to the mall recently, I noticed the price of these Uggs boots was much lower, and the store was not that crowded with shoppers who wanted to buy Uggs boots. I paid a high price for the Uggs boots last year because they were very popular and the store did not have much...