What is Economics?
Economics is the study of scarcity and its consequences for resource usage, the creation of products and services, the development of production and welfare through time, and a wide range of other complicated topics of critical relevance to society. Economics also refers to the study of how people, either independently or collaboratively, distribute finite assets for production, distribution, and consumption. The primary purpose of economics is to discover the most rational and effective allocation of resources to achieve individual and societal objectives.
The effective birth of economics dates back to 1776 with Adam Smith's Wealth of Nations publication. Previously, economics was known as home management, in which the leader of a household controlled the demands of family members with his limited resources. Until the 19th, economics was referred to as 'Political Economy.' Adam Smith's book 'An Inquiry into the Nature and Causes of the Wealth of Nations (1776), usually shortened as 'The Wealth of Nations,' became the first contemporary work of Economics.
The study of economics comprises the key disciplines of microeconomics and macroeconomics. Microeconomics investigates how individuals and businesses generate and consume products and services. Macroeconomics, on the contrary, analyses mass economic advancement and international commerce.
Types of Economics
Microeconomics is concerned with how individual consumers and businesses make decisions. Discrete decision-making units might be a single person, a household, a business/organization, or a government body. Microeconomics attempts to describe how people respond to price changes and why they want what they do at specific price levels by analyzing certain characteristics of human behavior. Microeconomics also tries to explain how and why various things are valued differently, how people make financial decisions, and how people may trade, coordinate, and cooperate most effectively.
Macroeconomics studies an economy's general state on both a domestic and international level, employing highly aggregated economic data and variables to model the economy. Its scope might encompass a specific geographical location, a state, a continent, or even the entire globe. Its critical research interests are recurring economic cycles and extensive economic growth and development.
Scope of Economics
The scope of economics has been widened to include numerous areas, some of which are listed below:
- Public finance
- International arena
- Urban and rural development
- Environmental studies