Fundamentals of 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, government, decision making, and more. It helps to understand how limited resources can be utilised to satisfy consumers’ desire to obtain maximum satisfaction.
Economics is classified into two significant parts:
Nature of Economics
Economics as a science: Science is defined as a branch of knowledge that is associated with the cause and effect relationship and analyses economic factors. Additionally, economics contributes in combining various sections of science 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 judgement, which means that it only states ‘what is’ and deals with just the facts related to the economy.
- Normative economics: According to normative science, economics transfers value judgement, 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?
Economics as an art: Art is a system that controls and represents the way things should be approached and completed. Economics has multiple sections such as creation, delivery, consumption, finance, and implementation of standard rules and regulations that are competent in solving complex issues and queries of the society.
Therefore, economics is recognised as both science and art: science for its methodology and arts for its applications in both professional and practical aspects of the economic problems we confront every day.
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