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Concept of Economics under Economics Assignment Help:
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
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.
What to produce: This is the first and main problem of an economy. In this, the economy has to
decide what it should produce to meet the demand of consumers.
How to produce: This is related to the choice of the technique of production. It is concerned
with the kind of resources to be used to produce the goods and services that should be used to
meet consumer demand.
For whom to produce: This is related to the allocation of resources. It answers the question
“who will be the target consumers for what is being produced”.
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
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
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.
Basic Concepts of Economics
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
Demand and Supply
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.
Cost and benefit analysis
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.
Economics Problem Solution Methods
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
It is a simple technique that eliminates the source of bad choices from economics.
Types of Economies
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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