Fundamentals of Economics

Fundamental economics concepts

Economics is a part of social science which is associated with the study of production, households, distribution, firms, consumption of goods and services, industries and government, and decision making, etc. It helps to understand how limited resources can be utilized to satisfy consumer’s desire and obtain maximum satisfaction.

Economics is classified into two significant parts:

Nature of Economics

  1. Economics as a Science – Science is defined as a branch of knowledge which is associated with cause and effect relationship and its analyses between economic factors. Additional, economics contributes to combining various sections of sciences like statistics, mathematics, etc. to understand the relationship between price, supply, demand, and various economic determinants.
    • Positive Economics – Positive science examines the connection between two variables, but it does not furnish any value judgment. Which means it only states ‘what is’ and deals with just the facts related to the economy.
    • Normative Economics – According to normative science, economics transfers value judgment, which indicates ‘what ought to be.’ This form of science is involved in policies required to achieve these economic goals.

Do you know? What are the Central Problems of an Economy?

  1. Economics is an art –  Art is a system that controls and represents the way things should be approached and completed as desired. Economics has multiple sections such as creation, delivery, consumption, and finance, and implement standard rules and regulations that are competent in solving complex issues and queries of the society.

Therefore, economics is recognized as both science and art. Here, science for its methodology and arts for its application applied in both professional and practical aspects of the economic problems that we confront every day. 

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