For friends who are new to economics
A Friendly Introduction to Economics

This book, "Economics for Beginners," is a friendly introduction to economics for young people who are new to economics or who feel that economics is far away.
It stimulates interest and promotes natural understanding by connecting economic concepts with phenomena commonly observed in familiar places around us, such as schools, playgrounds, amusement parks, and neighborhoods.
The focus is on explaining the key concepts and content of microeconomics, which can be difficult and rigid, such as the laws of supply and demand, opportunity cost, marginal utility, and elasticity, in an easy and fun way at a level that young people can understand.
It also covers a certain level of in-depth content, so it is a book that allows not only students who are studying economics for the first time, but also those who have already studied economics at the introductory level to review the content and organize the concepts once again.
Of course, it is also suitable for general readers who want to learn economics from the basics.

The occurrence of free-riding problems in relation to goods is closely related to the characteristics of the goods.
So first, we will divide the types of goods according to two criteria.
Please note that the goods mentioned here only refer to economic goods that are scarce. Free goods such as air or seawater are not scarce and are therefore not currently under consideration.
The first criterion is exclusivity.
Excludability is the property of something that can be made unavailable to anyone who has not paid for it.
An amusement park or a hotel room, which you cannot enter without paying for, are examples of goods with very strong excludability.
Goods like books that can be lent to friends or movies that can be downloaded illegally are excludable, but the degree of excludability is relatively low because there are ways to use them without paying for them.
On the other hand, goods such as streetlights and roads can be said to have nonexcludability because it is impossible to prevent anyone from using them.
The second criterion is competition.
Rivalry refers to the property whereby one person's consumption reduces another person's consumption.
The number or quantity is limited.
Resources such as oil and coal are highly competitive goods because their quantity is limited and competition for them is fierce.
However, there are goods, such as TV dramas or computer games, whose quantity does not decrease even when many people use them. These goods can be said to be non-rivalrous.
Of course, there are goods that fall somewhere between rivalry and non-rivalry.
Gyms are non-rivalrous when there are few users, but as the number of users increases, they begin to become rivalrous because the limited exercise equipment must be shared.
Based on these two characteristics, goods can be divided into four types as shown in Figure 18.
--- From "Division of Goods Types"


There are several factors that affect price elasticity.
First, the more close substitutes there are, the higher the price elasticity of demand.
In the case of butter, which has a substitute called margarine, when the price goes up, the quantity demanded easily decreases because people can buy margarine instead of butter.
Therefore, butter has relatively high price elasticity.
However, in the case of garlic, even if the price of garlic rises, demand does not decrease significantly because there are few substitutes to buy.
The demand for garlic, for which there are few substitutes, is more inelastic than the demand for butter, for which there are substitutes.
Second, luxury goods have a higher price elasticity of demand than necessities.
For example, because appendectomy is an essential service that must be performed when the appendix bursts, the demand for appendectomy will not decrease significantly even if the cost of the surgery increases.
On the other hand, cosmetic surgery is more of a luxury that is not absolutely necessary and can be done without it in most cases.
Therefore, if the cost of plastic surgery increases significantly, demand is likely to decrease significantly.
That is, appendectomy is price inelastic, while plastic surgery is price elastic.
Third, the price elasticity of demand changes depending on how the scope of the market or good is defined.
If we look at the price elasticity of ice cream, it can be said that ice cream has low elasticity because there are not many suitable substitutes.
However, if we narrow down the range of goods to chocolate ice cream and examine price elasticity, the elasticity increases because various types of ice cream, such as strawberry ice cream and vanilla ice cream, can be substitutes.
The narrower the scope of goods, the greater the elasticity because there are more substitutes.
Fourth, high production flexibility leads to high price elasticity of supply.
That is, the more freedom there is to produce more or less of a good, the higher its elasticity.
Pencils are a good that can be produced more or less freely.
Therefore, it is an elastic good whose supply is likely to change due to price fluctuations.
On the other hand, housing is a good that is not easy to produce more or less depending on the situation.
Therefore, it is an inelastic good whose supply does not easily change depending on price.
Finally, the price elasticity of supply and demand changes depending on how the time dimension is set.
For example, gasoline is a necessary good that must be purchased in the short term even if its price rises, so it has low elasticity.
But if prices continue to rise, in the long run people will increasingly buy cars that consume less gasoline or use public transportation.
Therefore, in the long run, the price elasticity of gasoline increases.

--- From "Things that affect elasticity"