September 21, 2021

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Nature And Branches Of Economics

Branches Of Economics

Human behavior patterns are studied in economics, social science. The study of how individuals, households, businesses, and governments use their finite resources to maximize profit is at the heart of economics. The ideal distribution of resources in society is the subject of economics, which is a wide subject. There are various sub-disciplines within the field that concentrate on distinct issues.

WHAT IS ECONOMICS?

Economics is a social science that studies how products and services are produced, distributed, and consumed. It investigates how individuals, businesses, governments, and countries make resource allocation decisions. Human behaviors are the center of economics, which is founded on the notion that humans act rationally, seeking the highest amount of benefit or value.

NATURE OF ECONOMICS

ECONOMICS AS A SCIENCE: There are so many similarities between the process of solving problems between science and economics. Along with this, another point of contention is whether economics is a normative or a positive science.

The difference between positive science and normative science is that positive science deals with “what is”. On the other hand, normative science deals with “what it should be”. Positive science explains the whole situation, stating whether it is right or wrong. Whereas, normative science evaluates the whole concept. After years of research, it is finally declared that economics is both positive as well as a normative science.

ECONOMICS AS A SOCIAL SCIENCE: One can say that, Economics is a social science. Because it is also a study of human behavior concerning available resources to maximize the profit. One of the examples can be, economics is the study of how people arrange their income to buy various commodities and services in order to achieve optimum satisfaction.

Moreover, study of economics also includes “how the decision making process works in an organization”, “how the product is selected to be produced”, “plant location”, “production technique”, and “pricing”. In addition, study of economics also includes the study of allocation of resources. It also studies how the resources satisfy the needs of people. It results in the welfare of the society at maximum.

BRANCHES OF ECONOMICS.

Microeconomics and macroeconomics are the two primary fields of economic studies. Microeconomics is the branch of economics that analyses how individuals and firms perform in specific conditions. Macroeconomics investigates how a country’s or perhaps the world’s entire economy runs.

MICROECONOMICS: Microeconomics is the discipline of economics that studies how people and businesses react to changing economic conditions. Some microeconomics is concerned with production, which is defined as the transformation of resources from one form to another, such as at a factory or office.

Understanding what motivates workers and their employers, as well as what causes hiring, layoffs, and compensation adjustments falls under the umbrella of labor economics. Microeconomics is important to many business owners because it focuses on problems that are important to them. It’s frequently thought to be more practical and less abstract than macroeconomics, which examines the entire economy.

Disadvantages of microeconomics:

  • Assumes an economy with full employment, which is impractical.
  • Deals with a subset of the economy rather than the entire economy.

MACROECONOMICS: Macroeconomics, on the other hand, examines the entire economy. The major part of it includes figuring out what drives the business cycle from boom to bust, or from expansion to contraction, as well as what regulates broad economic metrics like GDP, unemployment, and inflation.

Disadvantages of macroeconomics:

  • Ignores the economic well-being of individuals.
  • Only considers aggregate factors, which may or may not accurately reflect economic conditions.

CONCLUSION

Economics is a social science that analyses the production, distribution, and consumption of goods and services. It looks into how people, businesses, governments, and countries decide how to allocate resources. The two main branches of economic study are microeconomics and macroeconomics.

Microeconomics is a field of economics that studies individual customer and business behaviour in the marketplace. It focuses on particular firms’ demand and supply, price, and output. Macroeconomics, on the other hand, studies the entire economy. It addresses topics such as national income, employment patterns, inflation, recession, and economic growth. The complexity of commercial decision-making are rapidly increasing as a result of globalisation. As a result, organisations must have a thorough understanding of various economic concepts, theories, and techniques.

FREQUENTLY ASKED QUESTIONS (FAQs)

1. What is Economics?

Ans. Economics is a social science that studies how products and services are produced, distributed, and consumed. It investigates how individuals, businesses, governments, and countries make resource allocation decisions. Human behaviors are the center of economics, which is founded on the notion that humans act rationally, seeking the highest amount of benefit or value.

2. What are the two branches of economics?

Ans.

MICROECONOMICS: Microeconomics is the discipline of economics that studies how people and businesses react to changing economic conditions. Some microeconomics is concerned with production, which is defined as the transformation of resources from one form to another, such as at a factory or office.

Microeconomics is important to many business owners because it focuses on problems that are important to them. It’s frequently thought to be more practical and less abstract than macroeconomics, which examines the entire economy.

MACROECONOMICS: Macroeconomics, on the other hand, examines the entire economy. The major part of it includes figuring out what drives the business cycle from boom to bust, or from expansion to contraction, as well as what regulates broad economic metrics like GDP, unemployment, and inflation.

3. Explain economics as a science?

Ans. There are so many similarities between the process of solving problems between science and economics. Along with this, another point of contention is whether economics is a normative or a positive science.

The difference between positive science and normative science is that positive science deals with “what is”. On the other hand, normative science deals with “what it should be”. Positive science explains the whole situation, stating whether it is right or wrong. Whereas, normative science evaluates the whole concept. After years of research, it is finally declared that economics is both positive as well as a normative science.