What is economics about?
Before starting the blog, we have to understand, what is economics not about. Many people have a false impression of economics, and even one time in history economists was hated by society, as they see the economy as a source of all greed.
What is economics not about?
- It is not the way to make money, although it helps in making that.
- It’s not a study of the Stock Market.
- Also very surprising but true, the economist is not the people forecasting about the future of country wealth or etc.
- Socialism for rich
What is economics about?
It is the study of people and choices. A famous economist Alfred Marshall gives the definition of the economy as
“Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well-being.”
Thus, “Economics is on the one side a study of wealth; and on the other and more important side, a part of the study of man.”
So Economics is basically understanding the nature of people, that how they spend their money or make choices and how they earn it. For eg:- A smartphone company say Samsung, has to decide whether to produce tablet or smartphone more, or you have to decide whether to eat a healthy salad or junk food.
You are reading this article while reading you did not notice that you are using economics. You can play PubG or you can sleep or watch a movie at this time, but you are reading this article that means you think this more important than other option.
This concept is known as an opportunity cost in economics. Opportunity cost is what you give up in order to get something else depends upon the value it provides you.
Fundamentals of economics
Ok, now we have to understand first, that there are 2 basic assumptions in economics.
1) Scarcity:- Resources on earth is limited, one cannot have infinite tons of steel.
2) Cost:- Everything in this world, whether it is choices comes with a cost.
So in short what is economics about?
It is the study to use our scarce resources in order to get most out of it.
We have to use our resources in such a way that it gives you maximum value. For eg:- A person earn $3000 per month, so he can rent a car whose EMI can be around $1000 per month, it is up to him to make a decision. If he took a car, then it clearly means that he seems to have max value in getting a car for $1000 per month. Instead, another man can use this money to save for his child higher studies i.e, he has a higher opportunity cost for his child future than owning a car.
To learn about demand in economics visit:- https://myknowledgeclub.com/what-is-demand-in-economics/