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Economics is a branch of social science that studies the production, allocation, and consumption of resources. It can also be referred to as the science of scarcity and the choices that are made for the proper allocation of goods. It is a field where factors like demand and supply, exchange, trade, Costs, incentives, inflation, unemployment, etc. are studied. It closely analyzes all the domains and aspects underlying economics at various levels.
It also studies the behavior of consumers and also involves how the government uses scarce resources in an efficient and effective manner to meet the demand of and satisfy the needs and wants of its people. The study of economics can be divided into two broad categories i.e. microeconomics and macroeconomics.
Microeconomics is the study of home individuals, households, and organizations making decisions based on available resources. This allows economics to determine how the overall economy is likely to react in case of surplus resources or shortages. These decisions can also be used by the goods and services market to determine influencing factors that would help them make the required changes to retain consumer spending in the industry.
The central problem of the economy: Majorly there are three central problems of an economy that every economy faces i.e.
The main concepts that are covered under microeconomics are demand, supply, consumer equilibrium, etc. Demand represents the number of goods and services that a consumer is willing and able to buy in a given range of price. Supply refers to the number of goods or services that a seller is willing or able to offer for sale at different prices.
The relation between demand & supply: There is a direct relationship between demand and supply. When demand for a particular product increases the supply of that product will increase and vice versa.
The relation between demand and price: There is an inverse relationship between demand and price. This means that when the demand for a product increases the price for that product will decrease and if the demand for a product falls, the price of that product will increase.
Consumer equilibrium: It is the state of balance achieved by a consumer when he/she purchases goods or services with his/hers present level of income. It allows the consumer to get satisfaction from their income.
Production Possibility Curve (PPC curve): It refers to the graphical representation of the possible combination of two goods that an economy can produce with available resources and techniques with efficient and effective use.
Macroeconomics is the study of economics from a wider perspective and will take a nation, region, or the global economy into consideration. Macroeconomics studies economic behavior on an aggregate level. It includes the phenomenon and relationships between factors like inflation, national income, GDP (Gross Domestic Product), growth rate, changes in unemployment and price levels, and their effects on the global economy.
Our economics homework help covers the topics such as national income accounting, money, and banking, income determination, government budget, economy, etc.
National income: This refers to the value of money for goods and services produced in a country in a financial year. In other words, it is the total amount of money earned within a country during a financial year.
Inflation: Inflation is a rise in the prices of goods and services. In other words, inflation is a rapid increase in the price of a commodity in an economy over a period of time. It affects the purchasing power of a currency.
Gross Domestic Product (GDP): GDP is a monetary measurement of the market value of finished goods and services produced within the geographical boundaries of a country in a financial year. Usually, GDP is calculated on annual basis, but it can be calculated on a quarterly basis.
It is a basic concept of economics that is used to describe the availability of limited resources to meet unlimited needs. For example, the technology in many countries is still limited but the demand for technology is unlimited. Therefore scarcity allows us to use the least resources to meet the high demands.
Demand and supply are major concepts. They are known as the pillar of the market economy. Demand refers to the number of goods and services that the customers want to buy at the given price. On the other hand, supply refers to the availability of goods and services for the vendors and suppliers to sell at a given price. In most cases when the company wants to increase the demand for their product, they lower the price of their product so that the products can have a high demand and they meet the demand by increasing the supply.
It is the major point for the business. Because everyone in the industry wants to make money. It is based on the comparison between the cost and benefits of various products and services in order to increase their revenue to be as high as it can be.
This is similar to the extra money that is paid by the employer to the employee in order to motivate them to perform the job with more effort. Economic theory has two types of incentives i.e. extrinsic incentives and intrinsic incentives. The extrinsic incentives provide the motivation to the person to accomplish the task. On the other hand, extrinsic incentives are based on money, discounts, rewards, and bonus extra.
It is the process that is based on some points i.e. the past data observation and the problem at hand. With the help of this technique, we take the estimation of what choices will be made by the people on an irrational basis and why they would make them.
In this process, we break down the problem into various parts or compete to find out which factor is influencing it.
It is a simple technique that eliminates the source of bad choices from economics.
The economy is divided into 3 types, i.e.
Market economy: It refers to the economy in which economic activities are left to free play by the market forces. This type of economy is followed in the US, where the companies decide the prices and they can sell the goods or services at the highest price that consumers are willing to pay. It is also known as a free economy.
Centrally planned economy: It is the type of economy where economic activities are in the hands of a central authority in other words these economies are run by the government.
Mixed economy: It is the economy that possesses the characteristics of both i.e. market economy and a centrally planned economy.
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