Economics is the study of how society allocates scarce resources and goods. Resources are the inputs that society uses to produce output, called goods. Resources include inputs such as labor, capital, and land. Goods include products such as food, clothing, and housing as well as services such as those provided by barbers, doctors, and police officers. These resources and goods maybe be considered scarce because of society's tendency to demand more resources and goods than are available. Two of the major approaches in economics are called 1) classical and 2) Keynesian. Classical economists believe that markets function very well, will quickly react to any changes in equilibrium without much government policy. On the other hand, Keynesian economists believe that markets react very slowly to changes in equilibrium (especial to changes in prices) and that active government intervention is sometimes the best method to get the economy back into equilibrium.
2. Why study economics?
One of the first benefits of learning about economics is if you get an economics degree. With an economics degree you can work in a variety of different fields from finance and banking, government, sales and marketing, insurance, etc. You can learn a lot of skills and knowledge that you can apply to other jobs or to your personal life. Learning about interest rates, exchange rates, economic indicators and financial markets can help you make better decisions about investing money.
Economics also teaches students how to understand and spot secondary effects. Most economics problems have secondary effects. For example, a government creates a tax to pay for some needed social program, but the secondary effect of that tax is that it changes people's spending behavior, causing economic growth to slow. By learning more about economics and working on hundreds of economics problems, you learn the skill of being able to spot secondary effects in other areas. This can help you make better decisions about your personal life and make you more valuable to business; for example, "what are the possible secondary effects from a marketing program?"
Because you will learn more about how the world works, economics will teach you more about the impact decisions have on a company, industry, and country. You will learn more about the impact of international trade, both good and bad. You will discover the effect government policies have on the economy and on employment. It will help you make more informed decisions as both a consumer and as a voter. Furthermore, I personally believe that having a more economically literate set of bureaucrats, politicians, and journalists would be great for society. Economics, when done properly, shouldn't so much tell people what to think, rather it should give them tools about how to think of things more clearly and realizing the assumptions they may be making.
3. What are the 3 fundamental concepts of economics?
1. Trade Offs
This is probably the most important principle that affects us all. Nothing is free. For example, in order to go to college, one might need to give up 4-5 years of your life, possibly a lot of money, live in small rooms, and go without consistent sleep for literally years. It might be a good decision but it still requires trade-offs. It is important in life to be honest about the trade-offs and the real costs of everything we do, have, and spend money on. This is important, because it allows us to focus on our real priorities. For example, what’s more important: earning extra money we don’t need, or spending time with family? Earning extra money for retirement, or living a luxurious lifestyle that cuts away at savings? Being honest about our priorities, and understanding that everything “costs” something, we’re more likely to pick actions that lead to the best possible benefit for ourselves and our families. 2. Supply and Demand
This is probably the most important issue of...