Hello everyone, how are you doing today??
The Topic to be pondered upon for today is “What is Economic Exchange??”
Alright, let’s begin.
Shall we??
Economic behavior includes the transfer of scarce resources between individuals via Trade & Transactions in the marketplace. So when the people of any nation involve themselves in activities that lead to paid work, they mostly tend to swap their sparse time & skillset to make money.
After this event, when these people go out in the marketplace to purchase goods & services, they tend to exchange their scarce income for a certain X amount of goods and services as per their requirements.
Thus, it is safe to suggest that “Economic activity” is driven by the need to exchange.
Alright, now let’s explore some other aspects of economic exchange.
Wants and needs:
Frankly speaking, the need to exchange has its origins in human biology. Every human is born with some basic needs like the need to eat and drink when hungry & thirsty, the need to stay warm & protected from the harsh forces of nature, plus the need to be protected so that humans as a species can live long & prosper.
Now these needs & desires result in creating a sustained level of demand for food, drink, clothing, and shelter that need to be supplied in every economy all over the world.
In addition to this phenomenon, the human species possess wants as well which also has a firm influence on their behavioral patterns.
These wants tend to find expression in the form of producing & purchasing stuff like DVDs, computers, and foreign holidays.
These are all examples of wants. As income levels rise within a particular nation the relative importance of wants tends to shoot up in proportion to the process of satisfying & fulfilling basic human needs as discussed above.
However, it is to be noted that within a modern and affluent economy as witnessed in highly developed Western nations like the U.S., Canada, U.K., and Australia, the satisfaction of wants frequently dominates economic activity, while in less developed economies like Pakistan, Nepal, Afghanistan, etc, the satisfaction of basic needs remain the overwhelming goal.
Consumption:
The process of satisfying & fulfilling the needs and wants of any particular nation is known as consumption. The urges and desires to consume more goods and services like Netflix subscriptions+Playing games on gaming consoles like PlayStation & X-box, going out to eat, etc, are the motives that tend to drive individual economic actions, thus, laying the foundational motive for engaging in an exchange of scarce resources like Time, Money, Assets, etc.
So to be able to satisfy & fulfill consumption requirements in the modern age of AI & ML, individuals ought to exchange their skill and effort, or their enterprise, land, or capital, for a pay-check known as income in the case of people employed in any sector of the economy or employers solving problems in the marketplace & creating valuable & useful products & services in exchange for a profit.
These parties I.E. both the Employees & Employers can then exchange their income for other products & services they need, want & desire to create, maintain & improve their Standard of Living in any given society.
Through exchange, the process of consumption gets satisfied by a process called production which involves the usage of raw materials to build finished goods that moves down the supply chain from manufacturer to wholesaler to retailer to final purchaser.
That is a short & sweet story of products & services reaching the hands of the final purchasers which we shall talk about later in more detail in some other posts.
Till then, let's talk about this post in the comments section.
Alright, guys, that was it for this post on “What is Economic Exchange??”.
I hope you enjoyed it and learned a thing or two in the process.
Make sure to comment in the comments section because I would love to know your views on the topic of Economic Exchange.
Okay, bye.
See you in the next post.
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