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Economics is the study which deals with the production, distribution, and consumption of goods & services. It also involves the concept of demand and supply of goods and services. It studies the behavior of consumers. It involves how the government uses scare resources in an efficient and effective manner to meet the demand of and to satisfy the needs and wants of people.
The study of economics is divided into two broad categories i.e. microeconomics and macroeconomics. Let’s find out the concept of microeconomics first.
Microeconomics: In simple words microeconomics is the study of home individuals, households and organizations making decisions based on their available resources. This allows economics determine how the overall economic is likely to react in case of surplus resources or shortages. These decisions can than also be used by the good and services market to determine influencing factors which would help them make the required changes to retain consumer spending towards 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 foremost central problem of an economy. In this, the economy has to decide that what they should produce to meet the demand of consumers.
How to produce: It is related to the choice of the technique of production, means which kind of resources to be used to produce the goods and services that should meet the consumer demand.
For whom to produce: This is related to the allocation of resources, means who will be the target consumers for they are producing
The main concepts that are covered under microeconomics are demand, supply, consumer equilibrium, etc.
Demand represents the number of goods and service that a consumer is willing and able to buy on 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. It means 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. It means 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 purchases goods or service with his 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: Macroeconomics is the study of economics from a wider perspective and will take a nation, region or the global economy into consideration. Macroeconomics studies the 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 towards the global economy.
Our economics assignment help covers the topics such as national income accounting, money, and banking, income determination, government budget and economy etc.
National income: It refers to the value of money of 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: In simple words, inflation is basically a rise in prices. 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 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.
Types of Economies: The economy is basically 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?
Importance of Studying Economics: Study of economics enables us to understand different aspects of an economy. In other words, we study economics to know about "scarcity". Scarcity is a situation when the demand, needs, and wants exceed available resources. Economics is concerned with the selection of resources in a situation of scarcity. So, to cope with this issue, the study of economics is necessary.
Reasons why studying Economics is important: It helps to understand what is actually happening in the market or in an economy and in examining the state of the economy and their significance. It teaches us how to deal with the shortage of raw material and the scare resources; it also helps to cope with three major problems of an economy i.e. what to produce? How to produce? And for whom to produce? Study of economics tells us how to distribute and use resources in an efficient and effective manner. It helps in forecasting the future and ease to understand the behavior of consumers in an economy. As per our economics assignment helpers, study of economics provides a valuable set of intellectual skills and has diverse employment opportunities.
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