It is often said that the economy is contraindic. On the other hand, it is also said that economy is about human behavior. This should imply that the basic ideas of economy must at least be quite easy to understand and explain. (Assuming you are in fact a human.)
An important point in the economy is about the margin – thinking about the margin, decisions that are taken at the margin, and so on. On the one hand it sometimes seems difficult to let people understand what it means to make a decision in the margin, or to understand the difference between marginal costs and average costs. Some people try to illustrate the difference with the help of mathematics. For example, you can give someone a comparison for calculating the total costs and then telling that marginal costs are the first derivative of the total costs. They can then work out the marginal costs of a process with a small basic balculus. This is neat, accurate and ensures tidy exam questions that are easy to assess. It is also very possible to beat an exam full of these math problems at the end of the semester without the idea of making a decision to the margin ever really internalize.
On the other hand, if people really make decisions in the margin, it should not be easy to explain the concept to people by pointing out that these decisions are made, in cases that are easy to understand and recognize? Yes, actually. Consider the next meme. If you recognize what the meme says and understand why it is funny, then you intuitively understand the difference between average and marginal costs, and you understand what a decision in the margin means:
Assuming you are old enough to shave, you will recognize this immediately. Nevertheless, I will break a main rule of comedy and explain the joke.
Shaving patterns are expensive. To make mathematics easy, we assume that this package costs $ 20. The average costs per cartridge are $ 5. While using a razor, it becomes boring, making it less comfortable and effective to shave. So while the first cartridge wears out after five shaves, switch to the second. Because you have paid the full price for the package at the front, the marginal costs of throwing away the first cartridge for the second are essentially zero, while the marginal benefit is quite high. The same applies to throwing the second for the third, and the third for the fourth. But as soon as you start using the fourth, things change. Now the marginal costs of throwing away the fourth and switching to a new cartridge means paying the full price of a new package. As a result, people extend the fourth cartridge in the peloton much longer than the first three. All four razors have the same average costs – but they do not all have the same marginal costs when it comes to use and removal. And because people make their decisions about the margin, you ultimately see the kind of behavior that is emphasized in the meme.
Unfortunately, there are people who can pass economic programs with excellent figures based on their high degree of mathematical insight, but never absorb the economic way of thinking in a way that is presented by this simple meme. Mathematics is a good thing and certainly has legitimate use in the economy, but solving math problems is not the same as economic analysis.
There is an old saying that if you can’t explain something in a way that an eight -year -old can understand, you don’t really understand it yourself. Maybe there is an analogy here. If you can compile a simple meme that emphasizes how indifference curves work, which shows your understanding of the subject much more than calculating partial derivatives, the use of utilities or referring to budget lines. Anyone who is decent in maths can do the latter, especially in the context of a class exam. But only someone who has really absorbed the idea can do the first.