why do you learn economics

Topics: Economics, Economy, Microeconomics Pages: 6 (1720 words) Published: October 24, 2013

What is economics?
Economics is a study of how goods and services are produced, distributed and consumed. It focuses on how the economic agents; the sellers and the buyers interact with each other and how the economics flows around the world. Every single people should have a better understanding on it as it affect almost every single decisions in our life, as well as government’s decisions for our country.

Economy can be divided into two branches; microeconomics and macroeconomics. Microeconomics determined how individual or firms make decisions to allocate limited resources in the market where goods or services are available. It helps people to examine how the decision can affect the supply and demand for goods and services can determine the prices of goods and services. In addition, microeconomics concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by the buyers and seller.

Macroeconomics is in the other hand. It refers to the larger scope of economy that involved national economy as whole and provides a basic knowledge of how things work in the business world. Example, an industrial sector, oil and gas sector, and food and beverages sector, is not considered as a specific part of any of these sectors.

In economics, there are four systems. The first one is a traditional economic system. Basically, it is the first system used even before the century. It worked by exchanging goods for other goods. In its familiar term, barter system. This economic system is not very dynamic as things do not change much. Standards of living are static as individual do not enjoy luxury but economic behaviors and relationship are predictable. People know what to trade, who to trade, and what to expect from others.

The second type is the capitalist system. It is applied by the United States, Canada, Japan, and Germany. The privates sectors are most productive because they are profit oriented. There is no intervention from the government in the economic activities but suggests the economic regulation that involves minimal state involvement such as contract law. The system allows the consumer to determine the price of goods and services and there is right to own property. Competition is very tight because all firms want to collect profits and this stimulates a healthy competition air. Innovation and research become more invisible when there is advancement in the science and technologies.

The third system is command economic system. It is applied by North Korea, Cuba, and China. In this system, the government determines the economic activities and consumer does not have sovereignty. Besides that, there is no competition and profit oriented firm as the economic activity is controlled by the government. In term of freedom, the system does not offer the freedom of having business. The private enterprise does not exist and all the activities run by the government. Government may produce product whereby not required by the public.

Last but not least, the mixed economic system. This economic system is run by the government and yet the private firms. It is practice by most democratic countries such as Malaysia, Thailand, and Singapore. In this system, the price will be determined by the market mechanism. The government will provide all the amenities and private sectors will conduct their business activities without restrain. However, government will levy taxes in order to control the income disparity in the economy. The government will try not to interfere in the economic activities except for the illegitimate industries such as pharmacy and drugs control. Besides that, in this system the government will execute projects that unprofitable for the private sectors and the project crucial for the societal interest. Example, the electrical infrastructure development. Because of the project is expensive in term of its building...
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