Economics is the study of how people choose to use resources. See, resources are scarce but wants are unlimited. Say you have 20,000 rupees. But you want those Levi’s, that X-Box AND that E72. Not gonna happen right?
So what follows is a series of complex decisions that will finally resulting in you opting to buy one X box controller, one Halo 3 game DVD, a Levi’s belt and 200 garbage bags. Economics studies how your resources combine with your needs and the availability of goods to produce this final result, in a manner of speaking of course.
Generally, resources can include the time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services.
Important choices involve how much time to devote to work, to school, and to leisure, how much to spend and how much to save, how to combine resources to produce goods and services, and in democratically effective countries, how to vote and shape the level of taxes and the role of government.
Economics can be safely divided into two broad elements; the Macro and the Micro. Macroeconomics looks at whole economies, it deals with issues like growth, stability, government policy etc. While Microeconomics looks at individual agents like firms and consumers.
Economics is very much a social science and its main subject of study is Choice. The science tries to explain our choices and show how they change as resources become scarce. It also asks a lot of questions, most of them are short and start with the letter ‘w’.
Brought to you by The Economics Sir.