Sunday, February 5, 2017

Definition and Implementation of Economic Principle

Economic action of human being should base in the economic principle. How is the implementation in economic life? Study this article.

Definition of Economic Principle

In doing activity or economic action, human always have guidance to economic principle. What is the meaning of economic principle?

Study this simple example so understand economic principle.

Harun needs twenty-five notebooks. He comes into stationery. He observes the trademark and quality of the notebook and asks the price. Notebook in the same trademark and quality in Ampera store is cheaper than other store. Finally, Harun determines to buy notebook in Ampera store.

This simple example shows that Harun action is suitable with economic principle. That is human nature, if he cannot separate from economic principle. People certainly choose the way with the cheapest price of there is a requirement that can be fulfilled. If someone wants to buy something, he certainly tries to get the things he wanted by using little money.

In doing economic action people always have a guide to economic principle. Its caused that human has unlimited requirements, meanwhile the means to fulfilled the needs are limited or rare. Therefore, people ought to economize by applying economic principle. What is economic principle? Give definition of economic principle!

It is necessary to do economic activities that have a guide on the economic principle, but do not do this based on self-interest. Vice versa, it is an extravagance if someone conducts economic activity but he does not have a guide of economic principle. What about of a job is finished by four people, whereas it is supposed to be done by two people?

The Implementation of Economic Principle

In daily activity, both in economic action and non-economic action, people often apply economic principle.

a. Examples implementation of economic principle in economic action as follows.
1) Riska will buy a toy, she makes bargaining before she buy it.
2) Wulan prefers buying a pair of shoes in shoe with qualities and cheaper than other shops.

b. Example of economic principle implementation in daily activities (non-economic action) as follows.
1) Eto is a famous badminton player. He play not only not show up hos physical power, but also use brain to beat his rival.
2) Silvia prefers going to school by taking short cut.

The Difference of Economic Motive with Non-economic Motive

Economic motive motivated the woman sell something in the market via
You have understood to the definition of motivation or motives have not you?

Motif can be defined into two kinds, namely economic motive and non-economic motive. What is the different between them? Economic motive motivates human being to do economic action, while non-economic motives motivates human being to do non-economic action. The definition shows the action motivated by a will.

Economic action is action that motivated by a will. Economic motive is the motivation of the action, If the action is not motivated by will of non economic action, the motivation is non-economic motive.

The example of action based in economic motif as follows.
1) Mr. Hasim, a diligent farmer, works in his rice field to increase his income. His action is called economics action.
2) Mr. Toni, a sales representative, offer the product of his company diligently to get reward from his boss. Mr .Toni action is called economics action.
3) Some women sell something in the market to fulfill their needs. Their action are called economics actions.

The example of action based on non-economic motive as follows.
1) Young brother reads some books diligently to improve his knowledge. His action, diligent is non-economic action.
2) Messi practices playing football diligently to be a great football player. Igo action is non-economic action.

Economic Motives in Human Activities

Motive is an encouragement for people to do an action. To understand deeply about the economic motives, study the examples of motive on human action as follow.
All student do the test carefully in an emergency via
Learn the examples of motive in human action below! Elementary students in Bantul, Yogyakarta, after earthquake taken place, study hard to enter for final examination of Regional Elementary School. They do the test carefully because they are motivated to pass the examination with good marks.

Father watch news program on television. He is motivated by his will to able to know the up to date information to the country and wold  in globalization era.

Those example shows that what people do or behave are motivated by a will. The will motivates human being to do action, which called motivation or motif. In the first example. all assiduous students to the final exam carefully, although their area has been destroyed by earthquake. They are motivated by the will to pass the examination with good marks.

Human action is motivated by a will. It occurs to all action. The economic action cannot be a part from motivation of a will. The will motivates human being to do economic activity (economic action), called economic motivation or economic motif.

Economic motif appears in every human activity. The point of economic motif in every human activity can be defined into four kinds, namely economic motivation to fulfill the needs, to obtain authority, to get reward from human being, and to improve human prosperity. We will discuss fourth economic motif in every human activity and the example as well.

Economic Motivation to Meets Needs
Human beings strive to fulfill the needs
Human beings strive to fulfill the needs via
The will to meet needs means the will to achieved prosperity. For example, Mr. Karim is a poor man. Most of his needs have not met. To meet he needs, he works hard everyday. From his hard working, his income increase. Almost his needs are fulfilled. Now the Mr Karim lives in prosperity.

This example shows that the Mr Karim's working hard (to do economic activity) because of being by the will to fulfill the needs.

Economic Motivation to Get Authority

Someone work hard not to get the result, but because of another motivation. For example, Mr. Iwan is rich man. All he needs are fulfilled. He keeps running his company and attempts to expand it. Finally, dream comes true. He has the biggest company in his district so that Mr. Iwan is able to control economic of his area.

That example points out that the Mr. Iwan working to raise his company (doing economic activity) is not motivated by his will to achieve prosperity, but motivated by the will to raise his company. He gets the authority in economics field.

Economic Motivation to Get reward from Other Human Being

Some people work hard only to get reward. For example, Mr. Andi is a ship assistant. He works hard and carefully to care of the products and to serve the customers everyday. So, Mr. Andi conducts economic activities everyday. His industry and diligence make the shop take care of Mr. Andi grow so much. The shop owner gives reward to Mr. Andi's hard working.

The example shows that Mr. Andi does economic activity that is not motivated by the will to fulfill the needs. The profit of the shop taken care by him does not belong to him, but it belong to the shop owner. Mr. the Andi does the activity that is not motivated by the will to get the authority although the shop increase to be bigger, Mr. Andi position remains to as assistant.

It conclude that Mr. Andi does economic activity that is motivated by the will to get reward.

Economic Motivation to Increase the Prosperity of Fellow Man

Sense of humanity is able to motivate someone to do something. For example, Mr. Burhan is a leader of orphan treatment. To improve the orphan treatment house, he runs business. He uses the profit of his business to increase the orphan's prosperity that becomes his responsibility.

That example show that Mr. Burhan does the economic activity that is not motivated to adequate the needs, to get authority, or to get obtain reward. Mr. Burhan does the economic activity that is motivated by the will to increase welfare for fellow being.

Economic Action Rationally

In doing shopping people needs to apply priority scale via
Human beings always do something rationally. Economic action is conducted rationally as well. Its means, the action they have done given him economic benefit. Rationally economic action has characteristic as follows.
a. To get the maximum satisfaction with the minimum scarification. In economics, it is called economic principle.
b. Economic action is motivated by an interest. It is referred to as economic motif.

Rationally, economic action contents efficiency, giving profit ir benefit, and punctual.
a. Rationally economic action carry out by a person or family, as follows
1) spending income guidance by priority scale of the needs;
2) buying something by bargaining although he an not afford with expensive price;
3) being thrifty with electricity consumption;
4) being thrifty with fuel consumption;
5) holding weeding party, birthday party or circumcision in simply, to finance condition;
6) conducting economics action for certain purpose, for example some one builds house for he does not a house;
7) using substitute goods in replace expensive goods, for example not buying the expensive clothes, but buying cheap clothes as long as it is matches and durable.

b. Rationally economic action carried out by company, as follows
1) using cheap raw material, but it has good quality;
2) being thrifty with machinery using.

c. Rationally economic action conducted by government, as follows
1) building really useful thing, such as a dam to solve water trouble in dry season;
2) welcoming functionary who comes in simply way;
3) being thrifty with government financial, for example restricting functionary in abroad;
4) building solar energy electricity project;
5) suggesting bio diesel as alternative fuel.

Economics Action Conducted by Human being

Human beings conduct economic action to fulfill their needs everyday, such as, shopping, selling something, gardening, catching fish in the sea, being bricklayer, and becoming entrepreneur. In conducting the economic action, they are making decision and using opportunity.

a. Making Decision
Someone has to make decision properly. For example, someone have to make decision when she goes shopping. She buys the most urgent things first, then the urgent things, less urgent needs and unnecessary needs. If her money is limited, she does not need to buy unnecessary needs or post pore it. Thus, who do economic action needs to decide priority of needs.

b. Using Opportunity
In conducting economic action, some one has to be able to use the opportunity as good as possible. There is not always opportunity in this life. Therefore, if there is an opportunity, the actors of economic action have to use it.
1) Clothing Trader use opportunity in the moment to prepare Idulfitri, Christmas, and New Year for increasing his merchant.
2) At the time of holiday, the rate of tourism activity is increasing. Souvenir traders use this opportunity by increasing the members of their merchandise.
3) Knowing that people like watching action movie, there are many film producers produce the film action.

There are many others example of using the opportunity. Observe the activity of people in using opportunity, such as sidewalk trader, traveling salesman, and meatball seller. How do they exploit opportunity?

Appliance of Requirement Accomplishment

Human being has many kinds of requirement. Each of requirements needs accomplishment. Someone is considered to reach the prosperity if most of his requirements are fulfilled. Actually, the fact points out that everyone has problem to obtain rarity of goods and services as means of requirement accomplishment. Therefore, everyone attempts and strives to reach most of the requirement.

Goods and Service as a means of Requirement Accomplishment
The various and many kinds of human being's requirements can be obtained with some goods. Thus, goods constitute the appliance of requirement accomplishment. These are some example of goods to fulfill basic requirements.
1) Requirement of food and drink were fulfilled in form of rice, bread, and drinking water.
2) Shirt, skirt, clothes, frock, cloth , kebaya (traditional Javanese clothe), pants, shoe, and sandals are example of goods to fulfill requirements of clothes.
3) Residence requirement is house.

Shirt, skirt, clothes, frock, cloth , kebaya, pants, shoe, slipper, and house are the example of goods.

Requirement can be fulfilled not only with goods, but also with service. Service can fulfill primary requirement such as.
1)  Education requirement, it is fulfilled by formal education at school (teacher service).
2) Health requirement. Human being gets this requirement from doctor service by medical check up or treatment.
Requirements appliance is health service
Requirements appliance is health service via

Education from school are service from teacher, health check up or medical treatment are from doctor are requirement accomplishment, but it is not real noun/abstract noun. They are not goods they are called service.

Find five example of other accomplishment appliance of requirement both goods and service!

Differentiation of Goods

There are many kinds of goods at home or at school. Mention it! What are the goods for?

The goods you have mentioned are apart of requirement appliance. The goods are accomplishment of requirement. There are defined into four kinds, namely according to the infrequency, the relation with other, objective using, and process production.

1) The Type of Goods according to the infrequency
According to the infrequency, we divide the goods into three kinds, namely economic goods, free goods, and ilith goods.
a) Economic Goods
Economic goods are goods, which have limited amount, so that it cannot be adequate for all human beings. They can be goods such as food, clothes, house, car, radio, television, and book. The economic goods of service are service of lawyer, midwife, doctor's, bank, insurance, and hotel.

They are limited edition so it is hard to obtain the economic good. Human beings have to make scarification or reward to get the goods. The forms of the scarification or reward to get the goods. The forms of the scarification or reward are goods, service, or money.
1) Exchange something to other goods (barter). A farmer exchange his harvest with the fish [of] a fisherman.
2) Some work for other people the reward of the service, is rice.
3) The reward is money, for example some one has to give money to buy rice, or to rent the house, or to pay service of his car.

b) Free goods
Unlimited amount of good is called free goods. Compared by human being's requirement, free goods are much more. Therefore, it is easy to get them. We don't need to pay some money to get them.

The free goods, are available in nature, such as air and sunshine. Human needs air to breath as well as sunshine.

c) Illith Goods
Illith goods, will endanger human's life if Its amount is to much such water is dangerous when there is a big flood. Fire is dangerous when a house is on fire. In spite of this, human can't live without water and fire.

The classification of goods on the infrequency is not absolute into three kinds. Goods can be classified as economic goods, free goods, and illith goods. It is depend on the situation. For example, when there is abundant of water, people can get it easily without paying. In this situation water include in the free goods. However, in dry season it is using hands to get water. In a big city, people must pay water. In this situation, water is classified into economic goods. In different condition when it rainy continually water is evenly abundant and cause of flood. In this condition, water is illith goods.

2) The Type of Goods according to the Relation with the other
According to the relation with the other, a goods is classified into two types, substitution and complement goods.
a) Substitution Goods
Substitution goods are parts of two goods or more which can replace each other.
Rice with corn, firewood or charcoal with the kerosene, and bus with train.

Pair if those goods or things can replace each other. If rice too expensive to buy, people can substitute it with corn.

There are many people use the liquid gas (LPAGE) to replace the kerosene or charcoal.

Someone will go to Jakarta, but he run out of night ticket bus. However, he can keep going to Jakarta by train in the evening.

b) Complement Goods (Complementary)
Complement goods are two goods or more which can be more useful if we are use them in the same time.
Coffee with the sugar, tobacco with the clove, motorcycle with the gasoline, and mobile phone with pulse or credit. Have you had  a cup of coffee without sugar? Is it nice? Coffee will be nice if we put some sugar in it. Motorcycle or car cannot move without gasoline. That's why car without gasoline is useless. Cellular phone without pulse or credit is not useful.

3) The Types of Goods according to the Utility
According to the utility there are two kinds of goods, namely that is consumer goods and product goods.

Consumer goods are called final or finished products. We can direct use the product for our need, such as food, clothes, housing, car, television, and service guide and notary service.

Production goods are also capital it is used to produce other product, such as machine, raw material, and basic commodity. We use them indirectly. We use it to make other things,
Production goods is used to produce other product via

a) Machinery as equipment produce product of our necessity.
b) Raw material become final product goods and basic commodity.
c) The next step, we produce basic commodity become final product of our necessity.

4) Type of Goods according to the Production Process
Are there any factories around your neighborhood? It can be cigarette, textile factory, snack factory, or any others factories produce other product. Observe them! What are the raw materials of them? Do they process the raw material directly or do they process it once more?

According to the production process, there are three kinds of raw material, such as half-finished product and the finished product.

a) Raw materials
Raw materials are goods to be processed become the fabricating half-finished goods or finished goods.
1) Cotton (raw materials) will be processed to become textile (half-finished product).
2) Tobacco (raw materials) will be processed to become cigarette (finished goods).

The other raw materials are rubber, wood, cane, tobacco, peppercorn, and coffee.

b) Half Finished Product
Half-finished product is product that has been processed from raw material, but it is not already become finished product. It has to be processed again become finished product.
Flour half-finished product as process result of wheat will be taken into further processed become bread (finished product).
Other example of half-finished product are textile, chemical, spare part of vehicles, iron bar, and paper.

c) Finished Product
Finished product is result of processing raw materials or half-finished product and it has been ready to be use. Finished product is called final product.
1) Rattan chair (finished product) is the result of processing rattan (raw material).
2) Bread (finished product) is the result of processing flour (half-finished product).
3) Pizza (finished goods) is the result of processing flour (half-finished product).

The other example of half-finished product is house, rice, car, medicine, and clothes.

Wednesday, February 1, 2017

The Definition of Scarcity in Economics

Often, you find people stand in line to obtain or to purchase some goods or services they need. Why do they have to stand in line? Because there are scarce resources to make needed goods and service for people. While people's necessities, either quality or quantity, do not have a limit. The basic problems of economy are the scarcity of resources and human necessities.

Have you ever thought of why people stand in line for hours? For example:
1. to buy fuel at a gas station;
2. to buy train tickets at a train station.

Sometimes, the cases occur because of the scarcity of fuel supply and train service for the approaching the Labaran Day. Such a condition is about to happen as the result of the increasing demand for train service. Sometimes, people have to stand in line to get some scarce goods or service. It is quite different when people try to get some goods or services which are not scarce., such as ait. To get some air people do not have to stand in line because air is not scarce thing. What is the meaning of scarcity?

The Definition of Scarcity

Scarcity refers to a condition that there is a limited means of necessities fulfillment toward unlimited necessities. Human's necessities are not limited. It means when a need is fulfilled, it will be followed by any other needs to fulfill. A limited means of necessities fulfillment causes scarcity and imbalance of between resources and its necessities.

The Scarcity as the Basic Cause of The Economic Problems

People have necessities and try to fulfill them. When people have been able to fulfill their needs, it indicates they live prosperously. It can be concluded that those who are able to fulfill their necessities are included as wealthy people. While human have various necessities to be fulfilled. Human needs food, drink, clothing, vehicles, consolations, radios, televisions, material book, sport equipments, medicines, and many more.

Human necessities go to increase because of developed civilization. In former time, people did not need televisions, cinemas, videos, cellular phones, or vehicles. But, nowdays people need them all because civilization goes advanced rapidly.

Besides, world population gets to increase which causes a great amount of necessities. One necessity will be followed by other necessities. It flows on and on without any limits.

It is impossible to fulfill all unlimited human needs although a large amount tools and goods are reproduced. The fact points out that the increase of needs is not balanced with the increase of the means of the necessities fulfillment. The increase of needs is larger than the means of necessities fulfillment. In other word, human necessities are unlimited while the means of necessities fulfillment are limited. As the result, it leads to the scarcity of means of necessity fulfillment. The scarcity is the root of problems of economy.

How does human overcome the problems of economy? Human always attempts to over come the scarcity of means of necessities fulfillment. There are two ways out to handle the problems. Firstly, exploring natural resources. Secondly, producing brand new goods with existed production equipment.

Although human attempts to run the best ways, natural resources and production equipment are limited.
a. As natural resources, the large of the land is limited. Human cannot extend the large of the land. Besides, planting the land continually can be reduced the soil fertility.

b. As natural resources, the large of amount of seas is limited also. The large of sea cannot be increased, and then all sea resources tend to decrease.

c. Mine resources is also limited natural resources. When mines are over explored, they can be exhausted.

d. Forest as a lumber producer which human needs are limited resources. Felling of trees without compromise will destroy the forests. Even, it drives to natural calamity.

e. Device of production is limited, like factories, machines, and buildings.

The Needs According to the Importance Level, Time, and Characteristic

Every day human beings conduct economic action. Why do they conduct the economic action? The answer is to fulfill the needs. Therefore, before studying economic action, you need to have knowledge about type of the needs.

There are many human lives the needs that can be distinguished into three types that are the needs according to the importance level, time, and characteristic.

The Needs according to the Importance Level
The needs according to the importance level is distinguished into basic the needs and additional the needs.
1) Primary Needs
Primary needs or basic needs are the needs that absolutely have to be fulfilled to keep human survive. There are five kinds of primary needs.
a) Food and Drink
Human beings absolutely need food and drink. Without eating and drinking, human being cannot live.
people eat
Eating is basic the needs for every people via Limitless
b) Clothes
Human being will remain live although without clothes. However, there will be a lot of difficulty to face of, if human being does not wear clothes, because clothes have function to protect the body from bad nature condition or cold and hot weather. Human being without clothes will be suffering, as he will be ashamed if he associates with the others.
c) House
House is a residence for human being. House is also as a place to take shelter in and have a rest. What will happen if people do not have the house? Some one who does not have the house is called homeless. It means do not have residence, shelter, and place to have a rest. As a result, that people will suffer and get difficulty in his life.
d) Education
In former time, education did not represent the basic (primary) needs. Now education comes to the basic needs because education is useful for fulfilling development demand. Education is also needed to face the competition, which is getting strict in all sector, includes economic sector. Education is a foothold is life in the rising status. Nowadays, uneducated person will find difficulties in his life.
e) Health
Health is very importance for human being. Someone who always has problem with his health will suffer and find difficulties in life.

2) Additional/Secondary Needs
Additional (secondary) needs is differ from the basic need; it is not absolutely have to be fulfilled. Secondary the need is only as complement of the basic needs. It certainly will be better if additional needs are met. However, it does not matter if we cannot fulfill it. Unfulfilled secondary needs will not inhibit human being's life. Additional (secondary) the needs can be divided into two kinds that is ordinary additional needs and additional needs for extravagance. Here are the examples of ordinary additional needs: desk, cupboard, bag, radio, and vehicle. These are the examples of additional needs for extravagance: luxurious car, internet and air conditional.
Additional needs for luxury
Additional needs for luxury via Fast Furious 5

What will happen if someone cannot obtain secondary the needs for extravagance? He will not find difficulties in passing off his life. According to the characteristic, luxurious goods are used to affluence. Luxurious goods have function to raise self-esteem of the owner. People usually feel his self-esteem growing high if he possesses luxurious goods.

The Needs according to the Time
These needs are distinguished into two kinds, namely present needs and future needs.
1) Current Needs
Current needs is the needs, which must be fulfilled right at this moment. If someone cannot fulfilled it will cause serious impact.
a) Aman is starving. He certainly needs something to eat. If he cannot find something to eat, he will starve.
b) Somebody is so thirsty that she needs something to drink. If she cannot get something to drink, she will die.
c) Somebody get serious disease. He needs medicine. He will die if he cannot obtain the medicine.
d) A woman wears rag and crumpled clothes. She needs new clothes. If she cannot get it she will get trouble to get in touch with other people for she will be ashamed to go out.

Actually, food, drink, medicine, and clothes in this case include in current needs.

2) Future Needs
Future needs are necessities that do not have to be fulfilled at this moment. It differs from the present needs. The future need can be met any time, it does not have to be met at this moment. For example, old day guarantee the needs, its accomplishment is not needed now, but later after people become old. Thus, the accomplishment of future is still long. The example of the need to come is the needs of saving some earnings. Saving useful for the assurance of the future. Saving can be done with various kinds of forms, for example, in the form of tabanas (tabungan pembangunan nasional/saving the national development) and deposits.
Saving to fulfill the needs for future
Saving to fulfill the needs for future via

We live not only for now, but also for the future. Therefore, we must tend to be needs met now or in the future.

Needs according to the Characteristic
According to the character, need is divided into two kinds, namely corporeal/physical need and spiritual need.
1) Corporeal Need
Corporeal need is requirement to fulfill physical needs such as food and drink, clothes, accessories, and sport equipment.

Body needs food and drink for the strength, health, and growth. How is the physical condition of some one who is insufficient food and drink?

Clothes are needed to protect body from heat and chilled. Thus, clothes are useful to keep the body health. How about if someone let the body heat or chilled?

Jewelry is also needed for the sake of physical needs. Someone wants to beauty herself and her physical condition by wearing jewelry.

Everybody wants to have healthy body. Therefore, people need exercise. To do exercise some one needs sport equipment. That is why sport equipment by human being to keep their body health.

2) Spiritual Need
Spiritual need is requirement for the sake of spiritual necessity, such as entertainment, art, knowledge book, and worship.
a) Some time when our spirit run down, we come to hotspot to get over our weakness.
b) Art is able to make some thing seem beautiful. This beautiful feeling us comfort and happy.
c) Progressive and big nation always is eager to have knowledge as much as possible. Having sufficient knowledge satisfies our spiritual. Therefore, knowledge book become one of our spiritual requirements.
d) Human being spirit ha not been peaceful before giving himself up to God completely. To do this, human being does worship. By running religious service, human being can get peacefulness of soul. Therefore, it is become spiritual the needs for everyone.

It is hard to fulfill the needs. However, we must attempt to fulfill most of the needs. Some one can reach prosperity if he.she is able to fulfill most of the needs. Either primary or secondary the needs, not only present time, but future physical and spiritual as well.