An economy - is the institutional structure through which individuals in a society coordinate their diverse wants and desires.
An economic system is the system by which the economy is organized. For example, if an economy is organized through markets, it is a market economic system.
Discipline of economics studies how scarce resources are allocated among the alternative users. (Resources: land, labor, capital.)
Economics - is the study of economies, the study of how human beings coordinate their wants, given the institutional structures of the society.
In the study of economics, coordination refers to how the three central problems facing any economy are solved.
These central problems are:
1.What, and how much, to produce.
2. How to produce it.
3. For whom to produce it.
2. How to produce it.
3. For whom to produce it.
Economics is divided into two different branches: Micro & Macro economics.
Macroeconomics: deals primarily with aggregates (total amount of goods & services produced by society) and absolute levels of prices. It address issues such as level of growth of national output (GNP & GDP), Interests rates, unemployment and inflation.
Microeconomics: It is study of public, business choices. ( for example consumer decide how much of various goods to purchase, workers decide what job to take & business people decide how many workers to hire and how much output to produce.)
Because prices have important effects on that individuals decisions. The microeconomics is frequently called "Price theory".
Why do we have to make choices?
That is because of scarcity (the goods available are too few to satisfy individuals' desires).
Opportunity costs of a choice to use resources - is the next best alternative use of those resources sacrificed by making a choice.
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