SCOPE OF ECONOMICS
SCOPE OF ECONOMICS
Economics is a social science. The subject that economics deals with includes the analysis of economic problems of people in the society and the satisfaction of their wants. With the evolutionary changes of the society and its civilization, the subject matter scope of economics has expanded. The scope of economics is discussed below:
- As social science, economics deals with the economic activities of human beings. One person's day to day income and expenditures constitutes the subject matter of economics. For example, parents' affection and nursing service for their children are not the subject matter of economics.
- Resources are required to satisfy people's wants. So, the availability of resources and their use are important subject matter of economics. Adam Smith has termed economics as the 'Science of Wealth'.
- People's wants are unlimited. But the resources to satisfy t he wants are scarce. Economics discusses how men can get the maximum satisfaction by using the scarce means to satisfy wants based on priority. So, as subject matter of economics, the scarcity of resources is very crucial.
- People's wants are associated with production, exchange, distribution and consumption. Currency, banking system, public finance, trade etc. are also important parts of economic activities. Economics discusses these topics as well. Besides these, how economic development of the country is achieved through the means of economic planning is also included in the subject matter of economics.
- Economics takes into account the economic problems and economic activities and indicates proper solution to these problems. Economics also talks about the value judgment of human actions and behavior.
- Economics is a systematized body of facts which studies the behaviour and actions of a person, corporation or country related to enhancing the satisfaction of desires or increasing the welfare and economic or financial growth.
- Economics considers how individuals, families, businesses, or Governments make choices regarding the allocation of finite resources to fulfill their necessities and acquire the greatest fulfillment.
- The main aim of Economics is to solve the fundamental problem of scarcity of resources during a time when humans have unlimited wants by utilizing alternative resources.
- The word Economic appeared for the first time in the late 19th century.
There are two constituents of economics are as follows:
- Micro Economics: Microeconomics is the study of individual economic agents, like households and firms, and how they make decisions regarding resource allocation. It focuses on analyzing the supply and demand for specific goods and services, determining prices and quantities, and understanding factors influencing consumer and producer behavior. Key concepts include market equilibrium, elasticity, production costs, and utility theory. Microeconomics also examines how government policies, such as taxes and regulations, impact these agents and markets. By studying these micro-level interactions, economists gain insights into the functioning of the broader economy and can offer guidance on issues like pricing strategies, resource allocation, and market efficiency.
- Macro Economics: Macroeconomics is the branch of economics that explores the overall performance and behavior of an entire economy. It examines broad aggregates like GDP (Gross Domestic Product), inflation, unemployment, and national income. Macroeconomists analyze how government policies, such as fiscal and monetary measures, influence these economic indicators and overall economic stability. They also study long-term growth trends, business cycles, and international trade dynamics. Macroeconomics seeks to understand and address issues like economic growth, inflation control, and employment stability on a national or global scale, providing insights to policymakers and businesses for managing the health and stability of economies.