Miranda Beal
Spears School of Business, Oklahoma State University
EEE 2083-30940
Dr. Steve Trost
February 10, 2023
What is the Market
Per L. Bylund defines the market as the exchange. (Bylund, 2016). To elaborate on that statement, the market is the exchange of goods and services for money or other goods and services. Individuals participate in exchange for their own satisfaction. It would be ridiculous for a person to exchange a good that they value for a different item that they value less. For example, a farmer could take their crops to a local market and sell their items to the public. This would be an exchange of produce for money, which would be a valuable exchange for the farmer. On the other hand, the customer received an item that was necessary and more valuable than the money that gave to the farmer. Both parties received something that hold a higher value to them than what they originally had. If the customer got home and their produce was rotted or did not meet their expectations, fraudulent behavior was displayed by the farmer. He made the items seem more valuable than they truly were. (Bylund, 2016, p.5).
What is Economics
According to Bylund in chapter one of "How to Think About the Economy: A Primer" over the past three centuries economics has been about identifying, learning, and understanding the laws by which the economy works. Generally, the economy is thought to be the machinery, inputs, services, and industries that we use and work in. However, that is a simple explanation that is incorrect. (Bylund, 2022, p. 15).
"Core to understanding the economy is recognizing that it is about human actions and interaction. In fact the economy is people acting and interacting. It is little or nothing else." (Bylund, 2022, p. 15).
The economy is about how entrepreneurs create services and products to satisfy the needs and wants of consumers. The economy is not a thought-out plan, rather it is something that comes about when humans create and interact with others. For example, there was a positive impact on our economy when an engineer used his education and knowledge to build the first smartphone. A negative example would be the introduction of tourism to an area. The cost of living will rise for the locals and the goods and services that were easily accessible is being used by tourists. Resources have become scarce. (Bylund, 2022, p. 18). The production of goods and services is already extremely difficult but having more people trying to acquire products in a small area makes it nearly impossible for producers to meet demands.
The Production Process
In "The Seen, the unseen, and the unrealized" Bylund goes into detail about the production process. The production process is surrounded by uncertainty. An entrepreneur goes in blind, hoping that the good or service they plan to produce meets their expectation and the needs of their consumers. Before their item hits their target market, they have invested an extreme amount of time and money in their product. Not only do they have to meet the consumers' needs, but they must also anticipate them. (Bylund, 2016, p.6). Producers must also think about their cost and return on investment. They must look at whether they could substitute a different input and still get an acceptable output.
"Of course, using wood instead of steel would change the production process, and probably the product too, which means the entrepreneur must change the whole calculus and estimate what profit could be earned from a different product produced using another, alternative production process." (Bylund, 2016, p. 8).
Meaning, using a cheaper resource has production cost benefits, however, it could change the product completely and the process of creating it would be very different. It may no longer be the good they intended to create in the first place.
Per L. Bylund explains the production process in a different light when he wrote "How to Think About the Economy: A Primer". He explains that there is more to the economy than what we can find on shelf at the store. (Bylund, 2022, p. 42). We must think about the bigger picture. He uses a candy factory as an example,
"In fact, candy producers could not make their candy if there were not already producers of the necessary ingredients already available."
We must consider ever other processes required to achieve the machinery, ingredients, the factory, and even the training of employees, as well as the steps taken to produce the candy. Bylund explains how the miner does not think about how the ore he gathered will be turned into steel for a candy machine, (Bylund, 2022, p. 44) or how the farmer growing sugar cane expects it to be used to produce chocolates that will be passed out on Valentine's Day. The resources are not grown or made for specific goods, but rather for other producers to exchange for or buy to then use however they desire.
Entrepreneurs in the Economy
The goal that most entrepreneurs have is to create products and services that will benefit consumers, while making a profit. However, it is easier said than done. They must take into consideration a lot of factors working against them. As I stated previously, they must anticipate the next thing consumers will want to acquire. They have to be thinking in the future at all times. This becomes extremely difficult when the needs and wants of consumers can change in a split second.
"Something a person values in the present may not be something they value in the future." (Bylund, 2016, p. 5).
Entrepreneurs have to provide services and goods that will satisfy consumers. They have to be creative. If they produce something that already exists at the same price of the original product, what will make consumers choose their item? For instance, there are hundreds of different brands of mint flavored gum. Each time a new kind is released they promise something different, longer lasting flavor, better ingredients, no sugar, etc. However, not many people will switch from their favorite brand because they are content with what they already purchase. The ingredients to produce gum are not in high demand, so there is an abundance of it available to consumers.
"And the more we have of something, the lesser the satisfaction of using another one." (Bylund, 2022, p. 25).
In simpler terms, if there is an abundance of something, there is less satisfaction in using it. However, if a new product is available and we acquire it, we will be more pleased and fulfilled by using it.
They must also consider their current and future competitors. In chapter four of "How to Think About the Economy: A Primer", Bylund uses the example of the production automobiles. Manufacturers of buggies did not anticipate someone to invent such a product. Their industry was impacted negatively because another manufacturer created a product that benefitted the customers more than what they could provide.