Economics
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Economics is the study of how people make choices to satisfy their wants.
There are three main ideas that are useful for understanding economics.
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[change] Three ideas
Economics is a science that studies how people try to make use of the limited resources in the world to satisfy their wants. People's resources include their money, their free time, and their ability to work and make money. People have many wants for goods, such as the want for food, for houses to live in, and a new car to drive. However, there is only a limited amount of resources and goods available, which is called scarcity. For example, a person only has a limited amount of money and a limited amount of free time. This means that they have to make choices about how to spend these scarce resources on the different goods that they want.
[change] History
- 18th century analysis of wealth
- classical economics
- Marxist economics
- Austrian economics
- neoclassical economics
- welfare economics
Economists are strongly influenced by their times, for example, Karl Marx lived in a time where workers' conditions were very poor. John Maynard Keynes lived through the Great Depression of the 1930s. Today's economists can look back and understand why they made their judgements, and try to make better ones.
[change] Branches of economics
The two main branches of economics are microeconomics and macroeconomics. Microeconomics looks at the behavior of individuals, homes, businesses or even groups of these. Microeconomics looks at prices of things and of services. It wants to help people decide how to divide society's resources. To do this, microeconomics wants to understand how decisions are made and how these small decisions affect bigger things. Macroeconomics looks at the all the economy. It tries to explain the causes of numbers like national income, employment rates, and inflation. Connecting the two branches has been important and the general idea since the early 1980s. A good macroeconomic theory is based on microeconomics, meaning one can explain macroeconomic events using microeconomics for individuals.
There are a number of smaller branches that do not fit neatly into one of the two main branches, including:
- behavioral economics
- development economics
- ecological economics
- economic geography
- environmental economics
- energy economics
- financial economics
- human development theory including welfare economics
- information economics
- international economics
- labor economics
- managerial economics
- resource economics
- urban economics
