Economics is very important for human beings because it is directly or indirectly related to human desires, satisfactions, demands, and supply. The study of economics helps a person to know the different factors of the environment which affect human behavior and needs. Branches of economics help to understand the behavior of human beings on macro and micro levels.
What is Economics
Economics is the science that deals with the study of limited resources but unlimited wants. There are different types of Economics that gave various definitions of Economics. Nature and the scope of economics are much more than just consumption or utilization of goods, it covers many issues in society therefore sometimes it is referred to as a social science.
The word economics is derived from the Greek language word OIKOS and NEMEIN which represent the law of the house or household. Economics deeply focus on Cost and its benefits, demand, and supply, scarce resource, and their incentives and use.
- According to Adam Smith: Economics is the study and inquiry of nature and wealth and he is the one who said economics is the science of wealth.
- Francis Amasa Walker says: Economics is the study of knowledge which is related to wealth.
- Jean Baptiste says (J.B): Economics is the study of science which is related to the requirement or need.
- Marshall: According to Marshall, Economics is the study of wealth and science which is concerned with human welfare.
- Lionel Robbin: He says that it is the study of science and the study of humans and their behavior.
- He also says “Scarce is part of Economics“.
Branches Of Economics
What is micro and macroeconomics?
There are two branches of economics that are briefly described below.
What Is Microeconomics?
Microeconomics is the branch of economics that deals with the study of the behavior of an individual decision and the study of a small part of the economy as a whole is known as Microeconomics. Examples of Microeconomics are mentioned below,
- How to use funds from local business
- Spend government surplus by cities
- Local business production etc.
Demand elasticity, supply elasticity, and marginal utility are the key features of microeconomics. Nature of the microeconomics is to look at individual needs and how they use their resources and how they behave in the market. Microeconomics helps to use resources effectively and increase production and efficiency.
What is price discrimination in microeconomics?
Price discrimination is a technique of selling a product to a customer at different prices for that identical product. Sellers try to sell the product to a customer at the maximum price which they can get from a customer.
What is the budget line in microeconomics?
The budget line shows which products customers can buy on the bases of their earnings and income (This is related to the identical products that fill the need of a customer).
What is a microeconomic framework?
The written strategy shows how an individual makes a choice of using different ways that increase productivity and reduce the burden and time in a given budget or cost.
What Is Macroeconomics?
The branch of economics deals with the study of affairs not about an individual but on a large prospectus concerned with the overall dimensions of the economic life cycle. Some examples of Macroeconomics are as under,
- Unemployment rates.
- Economic Outputs etc.
Gross domestic product, National income, Unemployment, price indices, output, and consumption are the main features in macroeconomics. If we talk about the nature and scope of macroeconomics then it helps to find and know the aggregate ratio of the entire economy.
Macroeconomics helps in different ways to a country to know its current status and wealth. So the importance of macroeconomics is:
- It helps to know the resources and capabilities of a country’s economy
- Help to find the ways by which people’s income can increase
- Help to use money effectively
- Help people to find a job so unemployment can be controlled.
What is an investment in macroeconomics?
It shows how a country or a nation is investing in assets throughout the year, it can be on land, buildings, equipment, shares, inventories, pieces of machinery, etc.
Example Of Economics
If talk about the examples of economics then we will find a lot of examples but some of the very important examples are the followings which we usually see in our daily life.
- Changing the taste of the people according to the time and variations (Trend)
- When people are using a brand too much its price will always increase and its supply will short as a result, whereas if product consumption is too low its price will go down.
What Is Demand In Economics
Demand shows the needs of the people in an environment, it shows how people are behaving and spending their income on commodities. If a business wants to increase its leads, it must survey the demand in the market.
What Is Economic Development
Economic development set the policies and limits the transactions and activities to improve the way of life. It helps to execute the activity with proper strategy and planning. Overall it helps to improve in using resources that result in favor. Development is part of macroeconomics which is one of the branches of economics.
What Is Economic Growth
Economic growth refers to changes in the production or services (usually increase) and financial stability in the country. It shows a positive view of a country and has a very high chances of prosperity.
Economic growth helps a country’s government to collect more tax which they can use in different public sectors to give relief to its citizens.
What Is Money In Economics
In economics, money is a commodity or a medium that is used in exchanging goods or services. The circulation of money helps the economy to grow as more investment opportunities can be found easily.
Importance Of Economics
Economics study shows the current status of the country as the study of economics shows:
- Changing people’s desires and nature
- Changing demand and supply
- Increase or decrease in the price of a commodity
- Inflations and deflations
Government can work hard to overcome all these situations and this is how economics study helps a country to grow.
Types Of Inflation In Economics
Inflation shows the increase or decrease in the price of a good or a commodity. It is one of the most famous terms which is often used in economics. Following are the types of inflation.
- Demand-Pull Inflation: It shows the increase in price, increases in demand, and shortage of supply.
- Cost-Push Inflation: When people have much money to spend on the things that purchase, automatically price of the commodity increases.
- Built-In Inflation: When a product or a commodity price increases usually it is expected that income and salaries will also increase to balance the purchasing power.
Inflation does not mean negative all the time but it changes with the passage of time and variations which are created by a human being. The followings are the cause of inflation in economics:
- Increase in income and salaries
- Imbalance of demand and supply
- Increasing population and needs of the people
- Changing in the trend or teste of the people
- Decreasing the value of money
- Increasing the value of the assets
Fundamentals Of Economics
Economics is a vast field that never ends with learning but the followings are some of the most famous terms that we can say are the fundamentals of economics and management.
- Production and its factors
- Cost theory etc.
What is the difference between microeconomics and macroeconomics?
Microeconomics is the study of individual behavior whereas macroeconomics is the study of aggregate behavior.
What is the study of economics?
Study of nature and behavior, using resources and full fill the needs of human beings.
Why it is important to study branches of economics?
It is very important to know about the branches of economics as it is quite different from each other, microeconoics help to know about an individual whereas macroeconomics helps to know about the aggregate.
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