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Economics helps economists to understand how resources will be distributed in the society. It also helps them to know how inequality affects the economy of a given population or country. The principle of opportunity cost: Did you know that politicians only win elections because they promise the public more spending and cutting of taxes?
More spending and lower taxes is what the voters want to hear. But an economists would argue that every singe thing has an opportunity cost. Spending more on subsidizing free college education obviously means higher taxes.
One of the major jobs of an economist is to know what is going on in the economy and investigatereasons for unemployment, low economic growth and poverty. For instance,there are many arguments made about immigration. Instead of wasting public funds in political debates of whether immigration should be allowed or not, governments should hire economists to try to evaluate the advantages and disadvantages of free movement of labor.
Economics can help examine the effects of immigration on the countries involved. Making an economic forecast is more difficult than knowing the current situation of the economy. However, even though forecasts are not that reliable, they can still give decision makers an idea of what might be expected in the future.
However, a good economist is able to compare different variables and provide different potential outcomes. Applying economics when solving a problem avoids an overly ideological approach. For instance, a government may argue that a free market is always the best but an economist will provide a more elaborated philosophy that in some markets like transport and healthcare, government intervention can improve welfare and overcome market failure. Behavioral economics studies the reasons why people make certain decisions.
For instance, why people behave in a certain way, how governments can force people into a better behavior like banning alcohol and cigarette advertising, etc. Understanding which behaviors affect the economy can help economists know the current state of the economy and predict the future.
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This is a great opportunity for students who have additional information regarding their assignments to contact their assignments handlers with that information. Scarcity is a fundamental concept in economics, which is used to describe the availability of limited resources to meet our unlimited needs. Basically, resources like technology, raw materials, money, and manpower are limited but our demands and needs are unlimited. Studying economics therefore helps us to make informed decisions on how to use these scarce resources to meet our demands.
This is the main pillar of every market economy. Demand is the quantity of goods consumers want to buy at a given price while supply refers to the availability of goods vendors or suppliers are able to sell at a certain price. Hence, supply and demand explains how prices of certain goods are fixed. For instance, let us take an example of bread. If the demand for bread increases then suppliers have to produce more to meet this demand. However, when demand increases, prices rise proportionally and if the price is high, then demand tends to go down and suppliers have to lower the price in order to sell bread.
Cost and benefit analysis: This involves making a comparison between the costs and benefits of different products and services in order to maximize profits.
For instance, suppose a company X sends one of its employees every day to get some printing done. After sometime, the management realizes this task is tedious and so they plan to buy a printer.
Now, the management will carry out a cost and benefit analysis where they will calculate the cost of requesting printouts from outside the company and that of purchasing a printer considering the hidden costs in both situations. If they find out that the cost of buying a printer is equal to that of sending the employee out for printouts or buying the printer is cheaper than sending an employee for printouts, then they would prefer purchasing a printer to requesting printouts outside the company.
An incentive is the source of motivation to perform a certain task. There are two types of incentives namely; extrinsic incentives and intrinsic incentives. For example, if a company that produces juice wants to increase its production from bottles to bottles every day, it will announce a bonus for workers if they produce bottles per day. So in this case, the bonus is the source of motivation for workers. Often times extrinsic incentives are in form of money, discounts, awards, bonuses, etc.
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Even though it is convenient to classify economics in two branches, to some extent the split is so faint that it is hardly noticeable.
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Likewise, what would happen if the company increases salaries for its most productive workers and fires those who are less productive? These are some of the questions that microeconomics tries to solve. This branch of economics also studies the impact of your own decisions in a principle called opportunity cost. Opportunity cost can be defined as making one decision over another.
For instance, you may choose to consume a certain type of food instead of another. This decision involves economy cost as you end up missing out on the benefits offered by the other meal. Choices regarding opportunity cost may be related to your career too. For example, by choosing one job over another, you stand to gainopportunities but lose others. Because of the narrow focus of microeconomics, it is the best tool for making important decisions in your own life.
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While the main focus of microeconomics is the effects of certain decisions on businesses and individuals, macroeconomics focuses on the bigger picture. For instance, a microeconomist may look at how low interest rates affect individual borrowers while a macroeconomist would study how low interest rates affect the unemployment rate or national housing market. Macroeconomics would use measures like national income and GDP instead of individual factors to study the impact of a decrease in income taxes.
Economicsis constituted of a wide range of themes that showcase its historical and intellectual development. Some of these themes include:. This is the method used to investigate an economy. An economic methodology can be positive or normative, quantitative or qualitative, inductive or deductive. Economists use mathematical operations like algebra, relationships between economic variables, and equations to make inferences.
This is a sub-discipline of economics that studies the processes that prevent or create economic growth, human welfare, incomes, etc. It covers myriad issues such as agriculture, international finance, industrial organization, labor, resource economics, public finance, international, trade, money and banking, and more. This discipline of economics deals with the application of principles and tools to the analysis and understanding of environmental issues.
Environmental economics borrows from both macroeconomics and microeconomics focusing on changes in polices and institutions as well as individual decisions that affect the environment. There is no doubt that economics is a subject that every student must consider pursuing either privately or as a regular scholar. It is one of the most important subjects academic institutions are offering today to mold future economists. Just live chat with us or email us today and we will offer you the best possible assistance.
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