What is Economics?

Economics is defined as a science that deals with the making, distributing, selling and purchasing of goods and services. It is the science that deals with the production, distribution, and consumption of wealth, and with the various related problems of labour, finance, taxation, etc.

Economics explains the theories, principles, and models that deal with how the market process works. It attempts to explain how wealth is created and distributed in communities, how people allocate resources that are scarce and have many alternative uses, and other such matters that arise in dealing with human wants and their satisfaction. how people interact within markets to get what they want or accomplish certain goals.

What does economics mean to us?

Everyone is a part of economy and everyone uses the rules of economy too. From the time we are born, we become consumers of various products and services (say, medical services, baby foods, and so on).

Optimizes Resource Usage In today’s world, the amount of resources available to us is reducing each day. This condition will only worsen, if we keep using our resources with low efficiency and effectiveness.

Utilizes the “Opportunity Cost” This is another principle used for resources in which the scarce resources are utilized efficiently, after calculating and checking the opportunity cost. If we minimize the opportunity cost, we get maximum profits.Gains Social Efficiency If a society keeps on putting money into its economy with no profits or loss,

then the economy becomes inefficient and so does the society, as it gets dependent on the economy. We can say, economics shapes the world. Through economics, people and countries become wealthy. Because buying and selling are activities vital to survival and success, studying economics can help one understand human thought and behaviour.

Types of economics

There are two major types of economics

  1. Microeconomics  focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders
  2. Macroeconomics   on the other hand, takes a much broader view by analyzing the economic activity of an entire country or the international marketplace.

Types of Economic System

An economic system must define what to produce, how to produce it and for whom to produced it. Depending on the products produced and the environment, certain economic strategies will be more successful than others. The world’s economic systems fall into one of four main categories

  1. Traditional economy
  2. Market economy
  3. Command economy
  4. Mixed economy

Understands Individual Economics This is important for the growth of individuals economically. A person needs to understand the economic situations and stipulations present in his own life.