What is Economics & Learn About its Impact on Everyday Life

We are living in a world of limited resources and unlimited human needs. Here comes economics, which helps us to decide how to use these limited resources efficiently and also fulfill the needs and requirements of society. Economics is one of the branches of social science.

Simply put, economics is the study of how a society uses its limited resources and solves the problem of how the goods and services produced should be distributed among its population.

Examples of identifying economic problems are given :

·       Why are some countries poor with very low growth rates while some countries enjoy high living standards and high growth rates?

·       What is the role of international trade in the economic development of the country?

·       What are Global Inequalities?

·       Why are some countries more successful in creating jobs while others are not?

·       What is the best way to tackle poverty?

Economics considers all these problems and much more. Economics deals with the production, distribution, and consumption of goods and services. There are four factors of production in economics, which are land, labor, capital, and enterprise.

To begin our discussion of economics, we first need to understand

1.     Scarcity, and

2.     Two branches of Economics: Microeconomics and Macroeconomics

What is Scarcity?

It is simply a tension between our limited resources and unlimited wants. Or, the demand for goods and services in the economy exceeds the availability of goods and services. For example, for a country, limited resources are capital, labor, natural resources, and technology, etc. Therefore, the government has to decide what goods and services they should buy for the betterment of society.

Therefore, due to scarcity, economies must make decisions about how to allocate their resources efficiently.

Micro And Macroeconomics

Macroeconomics: The branch of the economy looks at the total output of a nation. It deals with the functioning of the entire economy and focuses on unemployment, taxes, inflation rates, interest rates, and growth.

Microeconomics: Microeconomics looks at similar issues but on an individual level. It studies the behavior of individuals or decision-makers (consumers and a firm). Microeconomics analyzes human behavior, how individuals (consumers and a firm) respond to changes in prices and why they demand at particular price levels.

Microeconomics and Macroeconomics are linked, it can help nations and individuals make decisions when allocating resources.