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Neopia's Fill in the Blank News Source | 3rd day of Relaxing, Yr 22
The Neopian Times Week 117 > Articles > The Neopian Economy

The Neopian Economy

by tsunamidestroyer

Neopoints; the ultimate currency of the game of Neopets. We simply cannot live without it, yet it's ever changing, always elusive, and above all, it is the main driving force of the Neopian economy. A good businessman and businesswoman will always have a basic knowledge of the economy, and that's no different in Neopets. After all, that's one of the reasons why an experienced Neopets player is always faster at making Neopoints than a newbie is, and this in-depth article should leave you making more Neopoints in ways you would have never imagined before.

Scarcity

Although this is the most obvious thing, Scarcity is the fact that as Neopians, we all have wants and needs that are infinite. Just feeding our Neopians and playing games is not enough at times; we want the best pet stats, the most trophies and the latest expensive paint brush and even after these have been satisfied - we will go on wanting and needing. Whatever the Neopian economy produces, it cannot satisfy all of these wants and needs because they are infinite, and this is the big problem we are all facing as Neopets players. Not everyone can have a Darigan Paint Brush, not everyone can have the most up to date stamp collection, and not everyone can have 10 billion NPs in the bank account, which means that we are all competing. Competition plays a vital part in the Neopian economy.

Supply and Demand.

This is the second, and probably the most important concept in Neopian economics and is directly influenced by Scarcity.

To explain this very basically, this means that when there is more of a certain item, and less of a need for it, the price of it is pushed down. So next time something decreases in price, think of it in economic terms, and take advantage of it by buying a large amount of that item for less.

For example, when the training school closed down, all of a sudden fewer people needed codestones in order to train their pets. Because of this, fewer people bought them and so shopkeepers had to bring down their prices. If you were an economist, you would have taken advantage of the situation by buying more codestones or holding onto the ones you already had.

However, when the training school reopened, prices of codestones rose back up again as demand rose as more people needed to train their pets and the supply was similar to that when the training school was closed. We can see from this that when supply is fairly low and the demand is high, a rise in prices occurs. This is when an economist would take advantage by reselling their codestones for a profit or using their cheaper codestones.

In a nutshell:

A high supply and low demand = A drop in prices
A low supply and high demand = A rise in prices
Supply meeting demand = Constant prices

Production Possibility Frontier

Put off by the long name? Don't be. Like every basic economic idea, this is simple. The production possibility frontier (PPF) of something is how much it can produce at its very best. We'll be looking at you in this case - how much can you produce in Neopoints at your most efficient point? Neopets is an economy, and every person in it a small business. Your PPF can grow, stay the same or decrease over time, and this will be heavily influenced by factors. In Neopets this would include the following:-

1. Labour
First and foremost -- labour. Labour is what makes it all pull together at the end of the day and it is what you have to be willing to put in to even have a PPF in the beginning. Firstly, the labour must be of quantity - you must have enough time to spend to reach your absolute best on NeoPets. Of course, with school, college and work, very few people can do this and so they are not operating at maximum efficiency. Not only does your labour have to be of quantity, it has to be of quality. Time spent has to be time well used, and this is where economics becomes unpredictable. People are good at different things. You may have three people; an amazing gamer, a speedy restocker and a perceptive stockbroker, and they may all choose to do different things. It is up to you to decide then, what your time is worth spending on in Neopets. If you are partly good at all of these, as most people are, it is good to diversify so you are not reliant on a few things alone. This also means if one thing is taken away, you do not suffer as a whole.

2. "Capital"
In everyday life, "capital" is considered money. Not in economics. Oh no. Capital means the means with which you produce something, for example. Neopets does not make a huge deal of this, but there is one thing you do need, and that's your computer. If you are a restocker, it helps if you have a fast cable connection, if you are a gamer, it helps if you have a slow connection, and if you are a stockbroker, it helps if you have the stock information available at Neodaq.com. Capische? Okay, good. Moving swiftly on…

3. Entrepreneurship
Entrepreneurship is all about yourself, your mind, and being creative. It's difficult to be completely original in Neopets because of certain restrictions, but all Neopian millionaires to some extent are creative. It requires imagination, foresight and guts to guess at what the "next big thing" is going to be, and it means the willingness to take a risk. No guide (especially not this one) is going to tell you how to gain entrepreneurship; it seems some people are just born with it.

4. "Land" (space in which to work)
Taking our example of a restocker, I can explain this fully in terms of the Internet. First and foremost, the restocker needs to be able to gain access to their main shop, and if there are millions of people trying to access it, this is unlikely to work. The more "space" they have in which to work, the more able they are to produce at their maximum efficiency. Similarly, a restocker needs to be able to sell the items, and if he cannot buy a shop or enough space in the shop, he will lack the ability to reach his PPF since there is not enough "land" or space.

5. Neopoints/Valuable Assets
This is where the phrase "You need to spend money to make money" comes in handy. The only place where you do not have to spend Neopoints is the games section, but if you are to become a Neopian millionaire, you have to be willing to "dig deep for the oil". There is just no other way. Investments take the form of paying money for items in main shops (restocking), paying money for stocks in the stock market, paying money for items overall, trading and nabbing a good deal in the auctions. This also affects your "Land" and your "Capital" factors, because to some extent you have to pay some money or Neopoints for these.

So there you have it -- the factors of production. This is a summary of everything that brings you that extra step closer to having more NP, and as soon as you increase a little of each factor, you are going to increase your efficiency. However, it's very much obvious that the most important factors in Neopets are capital and labour -- all the rest effectively spring from these.

Inflation

Although this is a fairly long article, I would be ashamed of myself if I did not mention this final and important aspect, which I am going to keep extremely short. You cannot really influence it as an individual, but you have to be aware of it to make the most out of your game.

Inflation in Neopets is the increase in the amount of Neopoints in the economy circulating. This increase in Neopoints causes a fall in the Neopoints' value, and a rise in prices of items that are bought with them.

Basically, inflation on a large scale is bad. It means that prices of items rise fast, and your NP becomes worthless. Inflation is a cause, not an effect -- Inflation is NOT the rise in prices, it causes the rise in prices. To be an economist, you need to be fully aware of this because the 1 million NP you made last year will not be the same as the one million NP you'll make this year (hopefully anyway..). The Neopets Team, thankfully, control inflation by making sure that money that goes out is roughly in balance with the money that comes in (this is called equilibrium). This is usually through "Luck" games, NP paid to main shops, notice board advertisements, the Wheels, taking a hard line with cheaters and so on. Often inflation can be offset by a War, when people spend money on codestones, and this has become quite normal in recent times, although what detracts is short term inflation since NP is circulating by chasing coveted Battledome items.

Summary

I hope you found this article an informative, and an in-depth guide, and that you have managed to take a broader view of Neopets as an economy. Economics is not just about learning certain skills -- it's about using your existent skills to apply them to different situations, and always being able to find the silver lining in the cloud. This economist's motto is: Neopets, like life, is only what you make of it.


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