Overview
Physics
and economics are two different disciplines that have no apparent connection
with one another in terms of their distinctive study and application. Physics
is the natural science that involves the study of matter and energy through
space and time to understand how the universe behaves under the laws of nature
that cannot be controlled by mankind (Wikipedia, n.d.a). In contrast, economics
is the social science that involves the study of supply and demand of goods and
services in an economy to understand how the market behaves under the laws that
are influenced by human behaviour (Wikipedia, n.d.b). Despite the difference,
there is an implicit connection between Physics and Economics. Several principles
of economics are analogous to the theories and laws of physics.
Principles of
Diminishing Returns vs Ohm’s Law
In
economics, diminishing returns is the decrease in the output yield by each
additional unit of input while holding all other factors and inputs constant
(Wikipedia, n.d.c). A common sort of example is adding more labourers to a job,
such as harvesting crops in a farm. At some point, adding more labourers would
cause some problems such as labourers getting in each other's way. As a result,
the amount of crops harvested by one additional labourer reduces due to the
ineffective and inefficiency among the labourers.
In
physics, diminishing returns can be described by Ohm’s law. Ohm's law states
that the current through a conductor between two points is directly
proportional to the potential difference across the two points, and inversely
proportional to the resistance (Wikipedia, n.d.d). For example, in a simple
circuit connected by a battery, a resistor and a led, if the voltage of the
battery is 1V and the resistor is 1Ω, the current flowing through in the
circuit would be 1A. If the resistor is changed to 2Ω, the flow of current
would decrease to 0.5A.
Economic
principle of diminishing returns is parallel to physics theory of Ohm’s law. In
a steady state firm, the larger the workforce, the lesser the marginal product.
Likewise, in a circuit, the greater the resistance, the lesser the current flow
for any applied voltage.
Principles of
Trade-off vs Law of Conservation of Energy
In
economics the term trade-off is expressed as an opportunity cost, referring to
the most preferred alternative to give up in order to obtain a desired product,
service or experience (Wikipedia, n.d.e). For example, the opportunity cost of
investing in a greater payoff stock is the greater risk exposure as compared
with the alternative of investing in a lower payoff bond that has a lower risk
of investment. Another example of a trade-off is whether to spend more time on
revising Physics and achieve a better grade in Physics test and spend less time
on revising Economics and obtain an average grade in Economics test or vice
versa.
In
physics, trade-off can be described by the law of energy conservation. The law
of conservation of energy states that the total energy of an isolated system is
fixed and conserved over time; the energy can be neither created nor destroyed,
but can change from one form to another (Wikipedia, n.d.f). During a free fall
for instance, the potential energy of the object is converted to the kinetic
energy, and the sum of potential energy and kinetic energy remains constant
throughout the process (i.e. kinetic energy and potential energy is increasing
and decreasing at the same rate respectively). Taking another example, in order
for a car to move, the car fuel must gain mechanical energy by losing its
chemical energy. Since total energy must be conserved throughout, if the gain
of mechanical energy is occurring at a faster rate than the loss of chemical
energy, the difference in their change must be represented by other form of
energy such as heat energy that could be dissipated due to friction.
Economic
principle of trade-off corresponds to physics theory of law of conservation of
energy. If an individual were to increase his or her consumption in a
particular goods by spending additional $100, he or she would have to $100 less
to spend on other goods. Similarly, if the magnitude of a form of energy in a
system were to increase by 100kJ, the magnitude of other forms of energy in the
system must be reduced by 100kJ.
Principles of Trade
vs Chemical Bonding
In
economics, trade refers to the exchange of goods or services between one entity
and another; trade exists between regions because different regions may have comparative
disadvantages in producing certain type of goods due to factors such as unfavourable
climate environment and unskilled labour force (Wikipedia, n.d.g). For
instance, China might has a comparative advantage in producing agricultural
goods given its habitant geography and comparative disadvantage in producing machinery
goods likely because of its poor infrastructure. If Japan on the other hand has
a comparative advantage in producing machinery goods but not agricultural
goods, both China and Japan could obtain those goods that they are disadvantage
in producing through trading.
In
physics, trade can be described by the chemical bonding. A chemical bond is an
attraction between atoms that allows the formation of chemical substances that
contain two or more atoms (Wikipedia, n.d.h). For example, in the element of
carbon, a carbon atom has an instable electronic structure with only 4
electrons in its outermost shell. To achieve stability, the carbon atom can
either share its 4 outermost electrons with other atoms (forming a covalent
bonding between the atoms) or transfer its 4 outermost electrons to other atoms
or receive additional 4 electrons from other atoms (forming an ionic bonding
between the atoms). One such example is every carbon atoms sharing its 4
outermost electrons with 4 other carbon atoms. Through covalent bonds among
themselves, carbon atoms form a very strong and powerful crystal structure
known as diamond.
Economic
principle of trade is related to the physics theory of chemical bonding. If
countries experience comparative disadvantage in producing certain goods, they
can obtain them through exchange of goods with other countries. Similarly, if atoms
have unsteady electronic structure, they can become stable by cooperating with
other atoms through either electron sharing or electron transfer.
Principles of Market
Equilibrium vs Heat Transfer
In
economics, market equilibrium is a state where market forces such as supply and
demand are balanced (i.e. quantity of demand equals to quantity of supply) and
market price is established (i.e. the price that seller willing to sell equals
to the price that buyer willing to buy) through competition among the sellers
and buyers in the market (Wikipedia, n.d.i). For example, if there is a
shortage of supply of eggs in the market, the market price of one egg, says 30
cents, would increase until says $3, driving off some buyers to reach an
equilibrium price where quantity of demand and quantity of supply are equal.
In
physics, market equilibrium can be described by laws of thermodynamics, the
concept of heat transfer in particular. In thermodynamics, heat energy will
move from a region with high temperature to another region with low temperature
until the temperature at both regions are equal (Wikipedia, n.d.j). For
example, when a red-hot piece is dipped into a beaker of water at room
temperature, the metal molecules having higher temperature than water molecules
will vibrate faster and collide with less energized water molecules, and
transfer part of their heat energy to the water molecules. During the heat
transfer, the temperature of the hot metal piece drops and the temperature of
the beaker of water rises. The process of heat transfer continues until the
point where both the temperatures of the metal piece and the beaker of water
are equivalent. Another example of heat transfer is heating up water on a
stove.
Economic
principle of market equilibrium is analogous to physics theory of laws of
thermodynamics. If the market demand is higher or lower than the market supply,
the market price will adjust until both demand and supply are equal. Similarly,
if the temperature of a system is higher or lower than the other system, heat will
pass from the hotter system to the colder system until both temperature of the
systems are equal.
Hyperinflation vs
Entropy
In
economics, hyperinflation occurs when a country experiences very high and
usually accelerating rates of inflation, rapidly depreciating the real value of
the local currency, commonly due to the increasing printing /supply of money
(Wikipedia, n.d.k). This phenomenon generally destroy the purchasing power of
individuals, distorts the national economy, and causes population to flee and
investment to be withdrawn from the country. One such example is the
hyperinflation in Zimbabwe in which the inflation in the country continuously
rising from year 2004 to 2008 to as high as 89,7×10²°% (Wikipedia, n.d.l). Such
hyperinflation is irreversible because no slight change can cause deflation
while decreasing printing of money. The hyperinflation in Zimbabwe eventually
ended in 2009 when the Zimbabwe dollar actually denominated.
In
physics, hyperinflation can be described by second law of thermodynamics, the concept
of entropy in particular. Entropy is a measure of the number of specific ways
in which a thermodynamic system may be arranged, commonly understood as a
measure of disorder (Wikipedia, n.d.m). According to the second law of
thermodynamics, the entropy of an isolated system which is not in equilibrium
will tend to increase over time, approaching a maximum value at equilibrium. For
example, when an ice cube is placed on a hot stove, the entropy of the ice cube
increases while it is melting, and such a process is irreversible because no
possible change can actually cause the melted water to transform back into ice
cube while the stove becomes hotter.
Economic
principles of hyperinflation is similar to physics theory of entropy. If
government keep on printing currency, the inflation in the country would
continuously rise as shown by the case of Zimbabwe, and the phenomenon would
not be reversible while keeping the supply of money lower. Likewise, if the molecules
in an isolated system becomes disorder, the entropy of the system would
continuously increase to a maximum value at equilibrium, and the outcome would
not be reversible while altering the direction of the process.
References
Wikipedia.
(n.d.b). Economics. Retrieved
November 1, 2014, from http://en.wikipedia.org/wiki/Economics
Wikipedia.
(n.d.c). Diminishing returns.
Retrieved November 1, 2014, from http://en.wikipedia.org/wiki/Diminishing_returns
Wikipedia.
(n.d.d). Ohm’s law. Retrieved
November 1, 2014, from http://en.wikipedia.org/wiki/Ohm%27s_law
Wikipedia.
(n.d.e). Trade-off. Retrieved
November 1, 2014, from http://en.wikipedia.org/wiki/Trade-off
Wikipedia.
(n.d.f). Conservation of energy.
Retrieved November 1, 2014, from http://en.wikipedia.org/wiki/Conservation_of_energy
Wikipedia.
(n.d.h). Chemical bond. Retrieved
November 1, 2014, from http://en.wikipedia.org/wiki/Chemical_bond
Wikipedia.
(n.d.i). Economic equilibrium.
Retrieved November 1, 2014, from http://en.wikipedia.org/wiki/Economic_equilibrium
Wikipedia.
(n.d.j). Heat transfer. Retrieved
November 1, 2014, from http://en.wikipedia.org/wiki/Heat_transfer
Wikipedia.
(n.d.k). Hyperinflation. Retrieved
November 1, 2014, from http://en.wikipedia.org/wiki/Hyperinflation
Wikipedia.
(n.d.l). Hyperinflation in Zimbabwe.
Retrieved November 1, 2014, from http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
