Economics Lesson: Higher Order Goods vs Lower Order Goods

steemit.com5y ago

Economics Lesson: The structure of production (the chain of steps before a good gets to a consumer) has higher order goods (cotton) and lower order goods (sweater)

Generally more developed structures tend to be longer (more steps) and this results in efficiency and productivity that means more wealth for everyone in the form of greater profits and lower prices.

Higher order goods may seem more important but they are often less profitable than lower order goods in part as a function of time (interest for the time the entrepreneur waits for a good to be produced then sold) and risk (less risk in producing a higher order good which has more applications thus a predictable demand)

So the reason I mention this is k-12 education is more similar to a higher order good and specialized skill training is more similar to late stage production. Understanding this can explain why prices and profits may seem different than what you may see as “more valuable” on its face.