What is Economics?
Fast food economics:
Microeconomics in fast food chains:
- Object to investigate: a random outlet of KFC – one of the biggest fast food chain in
the whole world.
- Problem to investigate: How to spot microeconomies in day-to-day activities that
each individuals make. Problems of microeconomies, which are the main factors?
There are four main factors in microeconomies described:
- Purchase decision of customers: Imagining sitting in the middle of a hustle KFC, you
see a woman buying 1 portion of fried chicken costing 6 pounds. That single activity
reflects two basic things: Her taste and her amount of budget. There is no
accounting for taste and personal favorites. For managers, that is one of the beyond
factor that bear a profound impact on customers decisions. Regarding the budget, it
can be implied that the transaction benefited both the woman and that fast-food
chain: With 6 pounds, she could have afforded other things like a ticket to the
museum, or a large bowl of ramen, but that fried chicken satisfied her than any
other thing else.
- About the production process, there are many inputs and outputs through that
transaction:
o Inputs: The ingredients, the cooks, the cashiers, tables and chairs, facilities
and people commanding these from the HQ…
o Output: All the items on the menu, the sitting place…
The manager is the one controlling the process of turning inputs into outputs. Also,
he/she has to be in charge of one other important thing.
- Pricing decision is a perennial problem for every manager. There is always a tradeoff: Increased revenue  increased cost of items  less items are sold. The key is to
balance out between price and quantities (*Demand and Supply).
- Employment and career choices can also be observed. There are significant
discrepancies between people working in a KFC kitchen and chefs working in fancy
restaurants. Cooks in KFC are mostly college students who want to earn a bit of
money to foot the bill, besides studying. In the other hand, pro chefs possess years
of cooking skills, together with passion and disciplines for cooking. That difference
also determines their customers. It can be seen that the KFC cook and pro chef make
different amount of money because of their difference in skills, experience, affecting
the output of the outlet itself.
 Microeconomics is the study of the behaviors of individuals and firms, and how they
interact with each other. Microeconomic decisions happen everywhere, at any moment.
*List three microeconomic decisions you’ve made today:
1. purchasing banh mi for breakfast
2. ordering a cup of black coffee
3. refilling gas
Macroeconomics in fast-food chains:
Macroeconomics is the study of the economy as a whole. Why can we witness a country’s
economy as a whole? Because all economic sectors are interconnected.
The main objects discussed are recession and tax modifications to tackle recession.
Let’s talk about recession, there are three typical features of recession:
- The total production of goods and service in a country stagnant or decrease
- More people are sacked from their job, or the unemployed may find it more taxing
to land a new one
- Lastly, people currently having a job may be deprived of high salary and promotion
prospects, even more, people tend to receive half as much as they previously earned
before the economic crisis
To combat this phenomenon, it is the government’s duty to either increase or decrease tax
levels. It is widely understood that higher tax means more governmental subsidizations, but
it also means more recession.
Therefore, most policy-makers have to make allowance for national debts, which ensure
that people are still willing to spend money in the light of increased taxes. This extremely
strenuous “transaction” is on the shoulder of the monetary authorities, which goes with
different names in different countries. For example, in the United State, it is called Federal
Reserve Bank (FRB); or Reserve Bank of Australia, in Australia, for sure. When the US
government issues more debt, the FRB purchase some of it. This institution is also able to
create new money (in effect, to print new currency) and use it to buy more debt. And these
currencies will begin to circulate the economy.
 Macroeconomics is the study about big sectors of one economy like employment, tax,
recessions, national debt,…, how they are interconnected and circulate the whole country