What is Economics?
Economics is the study of the production and consumption of goods and the transfer of wealth toproduce and obtain those goods. Economics explains how people interact within markets to getwhat they want or accomplish certain goals. Since economics is a driving force of human interaction,studying it often reveals why people and governments behave in particular ways.There are two main types of economics: macroeconomics and microeconomics. Microeconomicsfocuses on the actions of individuals and industries, like the dynamics between buyers and sellers,borrowers and lenders. Macroeconomics, on the other hand, takes a much broader view byanalysing the economic activity of an entire country or the international marketplace.
A study of economics can describe all aspects of a country’s
economy, such as how a country uses itsresources, how much time labourers devote to work and leisure, the outcome of investing inindustries or financial products, the effect of taxes on a population, and why businesses succeed orfail.
Nature of Economic Problem?
The economic problem, sometimes called the fundamental economic problem, is one of thefundamental economic theories in the operation of any economy. It asserts that there is scarcity,that the finite resources available are insufficient to satisfy all human wants. The problem thenbecomes how to determine what is to be produced and how the factors of production (such ascapital and labour) are to be allocated. Economics revolves around methods and possibilities of solving the economic problem.
According to Robert Awh, “Economic problem is the problem relating to the necessity of thechoosing what, how and for whom to produce and how to achieve economic growth.”
Concepts in the economic problem1.
While the basic needs of human survival are important in the function of the economy,human wants are the driving force which stimulates demand for goods and services. Inorder to curb the economic problem, economists must classify the nature and differentwants of consumers, as well as prioritize wants and organize production to satisfy as manywants as possible. One of the assumptions made in economics and the methods whichattempt to solve the economic problem is that humans are overall greedy, and thus themarket must produce as much as possible to satisfy them. These wants are often classifiedinto
(which depend on the individual preferences and an individual'spurchasing power parity) and
(those of entire communities). Things such asfood and clothing can be classified as either wants or needs, depending on what type of good and how often.