2. What is economics ?
Economics is not only a subject but also a regular practice in every individual's life.
It is a way of balancing the financial inputs and outputs. Whether it is a small family
or large family, small business firm or a big organization, and individuals pocket
money, etc. whatever it is one should plan before the month or count at the end of
the month or year. This is what economics is trying to balance the unlimited
requirements with limited resources.
Economics is defined as a technique or a tool of balancing most of the needs which
can be termed as a credit and the limited resources, which can be termed as a debit.
Keeping a proper and healthy balance between these two terms is nothing but
economics.
It has two streams, namely - macroeconomics and microeconomics.
3. Macroeconomics:
Microeconomics:
Macro means large. Macroeconomics deals with large
economic-related issues like a whole entity or a big
organization or the entire nation or the whole city or a
complete project etc. Inflation, annual budgets,
scarcity, poverty, etc. can come under
macroeconomics.
On the other hand, micro means small.
Microeconomics deals with small units, single
apartments, individual plants, household activities,
part of your project, a single event, etc. that come
under the microeconomics.
4. Concepts of
Economics.
• Supply and Demand: - It is one of the basic economic concepts
and theories. Supply and demand can be seen everywhere in our
daily life. To understand this concept more clearly, let's take a
common example like food products. If we take food and drinks,
they need to travel from the farmer to the consumer with multiple
mediators. So, the price may vary. The price of a particular product
depends upon the supply and demand of that product.
• Scarcity: - This is also the basic concept of economics, which also
acts as a factor of demand and supply. Because the supply doesn't
meet the demand, then the condition is termed as a scarcity of that
particular utility, whether it is food or product or money or any
other.
5. Concepts of
Economics.
OpportunityCost: - It is one of the 5 basic concepts of economics. It is
like a trade-off market. It is also termed as an exchange policy like if we
want something we need to give others in the form of cash or product
or whatever it is.We are creating an opportunity to sell our goods in
return for getting our requirements.
Value for Money: - It is one of the important concepts in economics
because the value of money may vary from time to time based on
different factors. It refers to utility that is derived from every money a
consumer spends.
Purchasing Power: - Another fundamental economic concept is the
purchasing power of consumers because if we take gold as an
example, even though the price of gold is reduced, the buyer may not
have the ability to purchase food at that particular time. If he can
purchase some amount of gold, the price may increase.That ability of
the consumer is called the purchasing power.
6. Applied
Economics
Applied economics is the application of economic theory to forecast the
likely outcomes of various real-world actionable options.We can help
people make better decisions by helping them understand the potential
consequences of their decisions, whether they are made by individuals,
businesses, or policymakers.
If economics is a tool for determining the best methods to achieve those
goals, then applied economics is the science that studies how people use
the various, limited means at their disposal to achieve specific goals.
As a result, applying economics can produce "to-do" lists for actions that
can be taken to increase the likelihood of successful outcomes in actual
events.
7. Case Study
How applied economics works?
Let's look at an example from applied economics to help you
understand the concept:
Customers typically look forward to purchasing items at
significant discounts or for free. As a result, marketers use
this proclivity to exaggerate the cost of their items while
indicating the true price.
For example, brand A charges 30 Dollar for a T-shirt with a
market value of only 20 Dollar. On the other hand, during the
holiday season, it announces a year-end sale and offers a $10
discount on the same T-shirt. As a result, even after offering
discounts, the company sells the T-shirt at its original price,
and customers are thrilled to get it at a significant discount.
8. Application of
Economics
There are many fields within the broad discipline of economics,
including labour, health and urban economics, economic history,
economics and the law, monetary and financial economics,
economic development, international trade, and environmental and
natural resource economics, etc.
The subject can also be applied to situations such as crime, war,
family, religion and much more. Some of these pathways employ
mathematics and statistics in order to find optimal solutions or
determine relationships between variables. For example, labour
economists may use calculus to determine the best combination of
labour and leisure for an individual, based on their preferences and
the wage rate.
A health economist may use statistical models to determine the
causal effect of education on health in order to determine how
obtaining more schooling can benefit your health.
Some of these fields are commonly used to help the government
make policies. For example, environmental economists can
determine the correct tax to charge pollution-emitting corporations.
The goal of this type of policy is to reduce the pollution created by
the corporation, thereby making society (as a whole) better off.
9. Application of
Economics
As another example, monetary economists can
determine the best time to increase or decrease the
interest rate, based on how the economy is
performing.
In studying the economics of crime, one may learn
how people respond to negative incentives created by
the criminal justice system, and how criminals (maybe
surprisingly) behave rationally.
As evident, there are many areas in which economic
analysis can be applied. You may consider studying
economics to better understand how businesses,
governments, and individuals make decisions
pertaining to this variety of topics.
10. Importance of
Economics
Better Understanding of Surroundings: It allows people to
understand other people, organisations, markets, and governments,
allowing them to respond better to the challenges and opportunities
that arise when circumstances change.
Wide Range of Careers: Economics majors are well-suited for a
wide range of careers, including law, risk management, finance,
foreign policy, public administration, politics, policy analysis,
health administration, entrepreneurship, market research,
journalism, undiscovered fields of the future.
Foundation for Analysing Public Policy: Economics provides the
primary foundation for analysing public policy. Majors are better
equipped to understand the underlying political concerns that
influence economic and social outcomes.
11. Importance of Economics
Understanding related issues: An
economist understands both the
broad issues of generational
consequences, welfare
implications, inequality, benefits
versus costs, market failure, and
public finance.
Participation in Public Policy
Discussion: Students who major
in economics have the knowledge
and skills to participate in public
policy discussions and take action
to promote economic and social
growth.
