Economics common sense is the knowledge point of public basic subjects in public institutions' examinations. In recent years, the examination method of economics common sense has become increasingly flexible and often involves some proprietary economic terms and some interesting economic effects. Below, CUHK will share with you a few economic effects of regular examinations.
1、 Ratchet effect
Ratchet effect refers to the irreversibility of people's consumption habits after they are formed, that is, it is easy to adjust upward, but difficult to adjust downward. Especially in the short term, consumption is irreversible. Consumers tend to increase consumption with the increase of income, but it is not easy to reduce consumption with the decrease of income.
The ratchet effect can be summarized by a sentence in Sima Guang's letter to his son Sima Kang in the Northern Song Dynasty: from thrift to luxury is easy, but from luxury to thrift is difficult. In addition, he also proposed: "Thrift is the common virtue; extravagance is the greatest evil." Sima Guang wrote this letter to warn his son not to be infected with the spirit of dandy, and advocate the family tradition of frugality for beauty, frugality and honesty.
2、 Marginal effect
Marginal effect: refers to the change in output or income of continuously increasing a certain input when other inputs are fixed. Marginal means extra increment. Common laws include the law of increasing marginal effect and the law of decreasing marginal effect.
The law of diminishing marginal utility refers to that within a certain period of time, when the consumption quantity of other goods remains unchanged, with the increase of consumers' consumption of a certain commodity, the increment of utility that consumers get from each unit of consumption of the commodity increases continuously decreases.
Incremental marginal revenue refers to the increased revenue generated by increasing the sales of one unit of product. With the increase of knowledge and technology input, the more output, the more revenue producers have. This law guides the operation of enterprises.
3、 Catfish effect
The catfish effect means that in the environment where catfish and sardines live together, the constant agitation of catfish also activates the survival instinct of surrounding sardines. The catfish effect is common in enterprise management. It usually means that an enterprise can stimulate the enthusiasm of its employees by some means, so that its performance can grow steadily.
4、 Crowding out effect
Crowding out effect: refers to the way that the government issues government bonds to raise funds from the private lending capital market, so that market interest rates rise, and private investment and expenditure accordingly decline. This is the crowding out effect of government expenditure on private investment and expenditure.
[Test question exercise]
(Single choice) When an organization's work reaches a relatively stable state, it often means that employees' enthusiasm for work is reduced. A "harmonious" group may not be an efficient group, which will play a good role in "medical treatment". This belongs to ______.
A. "Butterfly effect" B. "Herd effect"
C. "Catfish effect" D. "watch law"
[Chinese public resolution] The answer is C.
Option A, "butterfly effect" refers to seemingly unrelated, very small things that may bring about great changes. Option B, herding theory, also known as herding behavior and herd mentality. Option C, "catfish effect" When an organization's work reaches a relatively stable state, it often means that employees' enthusiasm for work is reduced. A "united and harmonious" group may not be an efficient group. At this time, the "catfish effect" will play a good role in promoting work. If there is always a "catfish" figure in an organization, it will undoubtedly activate the staff team and improve work performance. Option D, the watch law means that when a person has a watch, it can be until now, but when he has two watches at the same time, he cannot be sure. Two watches cannot tell a person a more accurate time, but will make the watcher lose confidence in the accurate time. For individuals, you cannot set two different goals for any one thing at the same time, or it will make this thing impossible to complete. So select C.
