Wednesday, December 22, 2010

What is Economics

There's no one universally accepted answer to the question "What is economics?" Various definitions are:

The Economist's Dictionary of Economics defines economics as "The study of the production, distribution and consumption of wealth in human society."

"Most simply put, economics is the study of making choices."

"Economics is a social science that studies human behavior. Economics has a unique method for analyzing and predicting individual behavior as well as the effects of institutions such as firms and governments, or clubs and religions."

"Economics is a social science that studies human behavior as a relationship between ends and scarce means which have alternative uses (Lionel Robbins, 1935). That is, economics is the study of the trade-offs involved when choosing between alternate sets of decisions."

“Economics is the Social science devoted to studying the production, distribution, and consumption of wealth.”
Another definition is "Economics is the study of how individuals and groups make decisions with limited resources as to best satisfy their wants, needs, and desires". This definition is perhaps better suited to Microeconomics, but it gets the important idea across that economics is not simply the study of money and the stock market.

Economics is the study of how, in a given society, choices are made in the allocation of resources to produce goods and services for consumption, and the mechanisms and principles that govern this process. Economics seeks to apply scientific method to construct theories about the processes involved and to test them against what actually happens. Its two central concerns are

• the efficient allocation of available resources and
• the problem of reconciling finite resources with a virtually infinite desire for goods and services.

Economics analyzes the ingredients of economic efficiency in the production process, and the implications for practical policies, and examines conflicting demands for resources and the consequences of whatever choices are made, whether by individuals, enterprises, or governments.

It very broadly consists of the disciplines of microeconomics (the study of individual producers, consumers, or markets), and macroeconomics, (the study of whole economies or systems – in particular, areas such as taxation and public spending).

Cheers
KK

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