Kirish Economic behaviour involves the exchange of one scarce resource for another. When people engage in paid work, they exchange their scarce time, effort, and skill for income, and, when people make purchases

Kirish

Economic behaviour involves the exchange of one scarce resource for another. When people engage in paid work, they exchange their scarce time, effort, and skill for income, and, when people make purchases, they exchange their scarce income for scarce goods and services. Economic activity is driven by the need to exchange.

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Before money, nations traded goods directly, paying for one good by exchanging it for another. It was barter on a national scale. However, barter had major disadvantages: it could not be divided into units of equal amounts, the value of the barter frequently depended on the quality of the goods, and the value of those goods would generally decrease over time. Animals, for instance, were frequently traded, but they age and eventually die, so their value would decline over time, eventually to nothing. Because of its many advantages, money was eventually created to facilitate trading. When people barter, everyone benefits because they receive items or services they need or want. Bartering also has an advantage because even people without money can get something they need. Bartering might involve trading a service for an item


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Once the money was created, it was made of different sizes and metals or papers in each region. used as a medium of exchange and created several conveniences. it has become more compact and easy to carry over time


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Wants and needs
The need to exchange has its roots in human biology. All humans are born with basic needs, including the need to eat and drink, the need to keep warm, and the need to be protected. These result in a sustained demand for food, drink, clothing, and shelter.


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Consumption
The process of satisfying needs and wants is called consumption. The need and desire to consume drives individual economic actions and provides the motive for engaging in an exchange of scarce resources.


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Factors of production
Production involves the creation of goods and services by using scarce resources. Producers must exchange the income they earn for the scarce resources they need to enable them to produce. Therefore, both parties, producers and consumers, must exchange something they have for something others want.


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Reciprocity is an informal give and take between people who know each other and are about equal in terms of power and status. This give and take of goods is part of their continuous social relationship, and the exchange creates and maintains their relationship. An example of reciprocity is giving a friend a gift for their birthday and expecting a gift from them in return on your own birthday.


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There are three forms of reciprocity: generalized reciprocity, balanced reciprocity, and negative reciprocity. In generalized reciprocity, you give someone something but you don’t expect something equal in return at a specific time in the future. For example, a parent who gives their child shelter and food, or pays for their education, does not expect the child to actually pay them back. In balanced reciprocity, you give someone something and you expect something fairly equal in return at some point. With negative reciprocity, you give something but expect to receive more value than you actually give.


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In redistribution, people in a group contribute goods or money into a common pool. Then, a central authority reallocates the pooled resources among the group. The people in the group may or may not be in social relationships with each other, but they all are in a relationship with the central authority. An example of redistribution is when you receive a paycheck from employment in the United States. The federal, state, and/or local governments take some of the wages that you earned through taxes. Then, the governments use the money collected for the benefit of the group (like building roads) or to benefit those in need (like supporting the elderly).


13-slide. With a market exchange, goods and services are sold for money. Then the money earned is used to buy other goods and services. In this form of economic exchange, the people involved don’t need to know each other, and the exchange process is less personal. You are probably most familiar with this type of exchange, but it is important to note that this type of exchange did not exist for most of humanity’s past, and may not exist in some traditional cultures.