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Economics Economics 1. three principal matters 2. basic economic problem 3. economics theories 4. basic concepts of economics Principal Matters Economics is a social science, which is concerned in large measure with human behavior. Economics, as distinct from other social sciences, is concerned with three principal matters: the behavior of prices; the forces which determine income and employment; the creation and distribution of wealth. Economic Problems Economics can be seen in terms of the study of human behavior in the context of limited resources, the allocation of those scarce resources, and the distribution of those scarce resources among competing groups. The basic economic problem confronting all societies is how to allocate scarce resources between alternative uses, because there are insufficient resources to produce all that are desired. Economic Problems The Economic Problem: scarcity and choice these choices include: what output will be produced? how will the goods be produced? for whom will the output be produced? Economics Theories standard economics can be divided into two major fields. the first field------price theory or microeconomics the second field------macroeconomics Microeconomics Microeconomics explains how the interplay of supply and demand in competitive markets creates a multitude of individual prices, wage rates, profit margins, and rental changes. Microeconomics assumes that people behave rationally. Consumers try to spend their income in ways that give them as much pleasure as possible. As economists say, they maximize utility. Macroeconomics Macroeconomics, deals with modern explanations of national income and employment. Macroeconomics dates from the book. The General Theory of Employment, Interest and Money by the British economist John Maynard Keynes. Macroeconomics His explanation of prosperity and depression centers on the total or aggregate demand for goods and services by consumers, business investors and gover
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