Economics
Scope of Economics
The scope of economics refers to the range of economic activities and phenomena that the discipline encompasses. It includes the study of production, distribution, and consumption of goods and services, as well as the analysis of how individuals, businesses, and governments make decisions to allocate resources. Additionally, the scope of economics extends to examining the impact of policies and external factors on economic systems.
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12 Key excerpts on "Scope of Economics"
eBook - ePub- Cynthia Metcalf, Rhonda Atkinson(Authors)
- 2017(Publication Date)
- Research & Education Association(Publisher)
Most contemporary definitions of economics involve the notions of choice and scarcity and their relationship to one another. Perhaps the earliest of these is by Lionel Robbins in 1935: “Economics is a science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” Virtually all textbooks have definitions that are derived from this definition, though the exact wording differs from author to author.The standard definition of economics is something like this: “Economics is the social science that examines how people choose to use limited or scarce resources to obtain maximum satisfaction of unlimited wants.”Macroeconomics is the study of the economy as a whole and includes topics such as inflation, unemployment, and economic growth. Microeconomics is the study of the individual parts (e.g., households, business firms, and government agencies) that make up the economy. It particularly emphasizes both how these units make decisions and the consequences of these decisions.COMPETENCY 2.1Analyze how scarcity and opportunity cost influence choices about how to allocate resources.Economists believe that human wants are unlimited while the resources to satisfy those needs are limited. Consequently, society is never able to produce enough goods and services to satisfy everybody, or almost anyone, completely. Alternatively, resources are scarce relative to human needs and desires. When resources are limited, the limitation affects prices (the amount of money needed to buy goods, services, or resources). Scarcity
eBook - ePubNew Institutional Economics as Situational Logic
A Phenomenological Perspective
- Piet de Vries(Author)
- 2023(Publication Date)
- Taylor & Francis(Publisher)
The definition of the scope as subject matter should be in accord with what it is ‘ as actually used ’. The prevailing interpretation is that exchange is the very subject matter of economics as it has been since Adam Smith. At the same time, the Marginal Revolution has brought in the concept of choice as a plausible alternative candidate. The infinitesimal calculus narrows, by nature, an economic subject’s attention and concentrates it on a clearly quantified decision issue. Furthermore, a perennial tension exists between limited means and a broader gamut of ends. It results in Lionel Robbins’s famous definition of economics. Robbins states: Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses. (1932 : 16) Therefore, Robbins’s definition of choice as a matter of subject seems plausible. However, in his methodological essay, What Should Economists Do? James Buchanan takes on Lord Robbins as an adversary, stating, ‘categorically, that his all too persuasive delineation of our subject field has served to retard, rather than to advance, scientific progress’ (Buchanan 1979 : 20). Since Robbins’ economics definition emerged, it seems to be conventional wisdom that the economic problem involves the allocation of scarce means among alternative ends. Scarcity necessitates choosing, allocating means to an end. So, the economic problem is an allocation problem and a choice issue due to scarcity. Buchanan disputes this view. First, it renders economics a technical affair for which a single optimal solution exists. Robbins considers the problem of technique and the problem of economy as fundamentally different problems. ‘The problem of technique arises when there is one end and a multiplicity of means, the problem of economy when both the ends and the means are multiple’ (Robbins 1932 : 35)
eBook - ePubBusiness for Communicators
The Essential Guide to Success in Corporate and Public Affairs
- Sandra Duhé(Author)
- 2021(Publication Date)
- Routledge(Publisher)
Chapter 3A Micro and Macro View of the Economy
DOI: 10.4324/9781003000600-4In Chapter 2 , we covered the origins, benefits, and sources of opposition to capitalism. Capitalism is the organizing framework for economic activity in the U.S., and the economy is the marketplace where the pursuit of self-interest and profit takes place. Although the mathematics of economics can get complex, economics as a field isn’t just about numbers. In my opinion, the most interesting parts of this social science focus on the intriguing relationships between limited resources, expectations, information, and the choices people make in their daily lives. Economics is, ultimately, a study of human behavior. Understanding how the economy works and what it means for your firm requires that we examine the economy from two different, but highly related, perspectives: the micro, or firm, level and the macro, or broader economy, level. Let’s get started.Ten Principles of Microeconomics
Microeconomics focuses specifically on how the actions of individuals and firms affect resource allocations related to the production, exchange, and consumption of goods and services in an economy (Chappelow, 2019c ). Factors of production, including land, labor, money, and other assets, are obviously limited in quantity. There’s not an endless supply of cash, time, production capacity, or labor force upon which a firm can draw. As such, choices must be made, and those choices fall on the shoulders of line management1 who are primarily responsible for monitoring and growing the bottom line.2
eBook - ePub- Neva Goodwin, Jonathan M. Harris, Julie A. Nelson, Pratistha Joshi Rajkarnikar, Brian Roach, Mariano Torras(Authors)
- 2022(Publication Date)
- Routledge(Publisher)
The decisions that we make every day are guided by various goals. Sometimes, these goals conflict with one another. You surely want to get good grades, but you also want to have enough time to spend with your friends and family. As a society, we may want better health care, but spending more on health care means less will be available for other things such as environmental protection and national security. Economics has much to teach us about how we negotiate the tradeoffs among the many things that matter to us. Some of these things are measured in dollars, but as we will soon see, economics is about much more than money.Whatever your reasons for taking an economics course, we hope that by the end of it you will discover many ways that you can use economics to understand the world around you, define your personal and professional goals, and work toward a better future.1. Our Starting Point
We define economics as the study of how people manage their resources to meet their needs and enhance their well-being. This may sound a little vague, so let us discuss this definition a bit.economics: the study of how people manage their resources to meet their needs and enhance their well-beingOur “resources” include natural resources such as forests, productive soils, water, and air, as well as human-made productive resources such as factories, trucks, computers, and roads. Our resources also include our knowledge and skills, financial resources, and even the social relationships that improve the quality of our lives.Our “needs” obviously include our basic requirements for food, shelter, and physical security. Beyond those, different people may have different views about what constitutes a “need.” Some people may think that having their own car is a “need,” yet others may see it as a luxury. This textbook—and economics in general—will not tell you who is correct in such debates. Decisions about what economic goals should be pursued, and how to choose among competing goals, are for you and others to make for yourselves. But some knowledge of economics can help determine how different decisions impact society as a whole and different groups of people as well.
eBook - PDF- Neva Goodwin, Jonathan M. Harris, Julie A. Nelson, Brian Roach, Mariano Torras, Jonathan Harris, Julie Nelson(Authors)
- 2019(Publication Date)
- Routledge(Publisher)
This broader approach may be referred to as contextual economics — economics viewed in the social and environmental realities — and is the approach taken throughout this text. Discussion Questions 1. Which of the macroeconomic goals discussed above do you think should have the highest priority? Why? Are there other major goals that you think are missing from the preceding discussion? 2. No one would argue that the goal of macroeconomics is to make people worse off! Yet the above outline of macroeconomic goals suggests that trying too hard to achieve some narrowly defined goals may lead to such a result. Why do you think that some economists would view economic growth as the major goal, while others view it as potentially in conflict with other goals such as economic, social or environmental sustainability? 3. M ACROECONOMICS AND THE D YNAMICS OF R EAL -W ORLD M ARKETS Much of microeconomics, as we have seen, is based on supply and demand analysis, in which price adjustments lead to economic equilibrium. If this same logic applied to the economy as a whole, there would be little need for a separate theory of macroeconomics. But, as described in earlier chapters, few if any markets truly approach perfect competition. Markets may be characterized by market power (as discussed in Chapter 18). Buyers and sellers may have imperfect information, or be bound by long-term contracts. The role of assumptions and expectations can be significant. For example, if people were used to paying more for the services of lawyers than for the services of teachers, lawyers would be very resistant to changes in the relative prices. In general, wages, which are a special kind of price, can be affected by a variety of things aside from simple supply and demand. For these and other reasons, the mechanism of price adjustment may not work as smoothly as a simple supply-and-demand model might suggest.
eBook - PDFEcological Economics
An Introduction
- Gareth Edwards-Jones, Ben Davies, Salman S. Hussain(Authors)
- 2009(Publication Date)
- Wiley-Blackwell(Publisher)
3.5 Microeconomics and macroeconomics The discipline of economics can be divided into two sections: microeconomics and macroeconomics . Micro-economics considers the allocative decisions taken by individual agents: consumers and firms. Microeconomists tend to focus on one particular aspect of these indi-viduals. They examine the variables which determine why an individual demands any one commodity and why a firm supplies it. Microeconomics thus considers the circular flow in the economy at a microscopic level. Macroeconomics takes a different perspective. It considers interactions in the economy as a whole. Macroeconomics considers such variables as aggre-gate employment, the average rate of price increases (inflation) and the foreign exchange rate. These are concepts which are familiar to the lay person from the daily news. Macroeconomists model the economy’s behaviour at this macroscopic scale. 3.6 The allocative system There is more than one way in which commodities can be produced and distributed in an economy. The two principal alternatives are the market mechanism and the command economy . A mixed economy brings ele-ments of both together. 3.6.1 The market mechanism A market need not be a geographical location. A market can be defined as the interaction of individuals in a freely operating exchange of goods and services . Crucially, it is characterized by the use of prices as a signal to the different groups acting within it. For indi-viduals, price determines commodity consumption and, correspondingly, their decisions as workers about how much employment to substitute for leisure time. For firms, decisions about what to produce and how to produce it are also governed by price. The prices of resources are adjusted, through changes in demand and supply , so that resources are employed to produce those goods and services which society desires. The operations of the laws of demand and supply are ana-lysed in Section 3.14.
eBook - PDF- Thomas M. Power(Author)
- 2020(Publication Date)
- Taylor & Francis(Publisher)
What is usually relevant in decision making is mar-ginal value, the value of small changes in the quality and quantity of each of these. It is this focus on the margin where decisions are made that moves economics away from the larger philosophic questions. 4. ECONOMICS AS THE SCIENCE OF VALUE AND CHOICE Economics received its current modern definition from Lionel. Robbins in his 1935 book, An Essay on the Nature and Significance of Economic Science, where he defined economics as the science which studies human behavior as a relationship between ends and scarce means which have alternative uses. Note how broadly Robbins has cast the economist 1 s net. Any problem which involves the pursuit of specifiable, multiple-objectives for which the means available are scarce and usu-able for the pursuit of more than one objective is an econo-mic problem. Clearly in that sense the use of the resources of the social and physical environment and the services flow-ing from them which we have labeled the QOL is an economic problem and behavior with respect to them can be subjected to *Ibid, pp. 45-46. 87 economic analysis. One thing the study of that behavior can tell us is how individuals vaZue the goods and services which flow from these environments as compared to the goods and ser-vices they can obtain from manufacturing and service activity. The private human made environment of the home, yard, restau-rant, and theater provide services to individuals as does the social and natural environment. The economic analysis we have tried to carry out has asked what human behavior in pursuit of each of these types of environments tells us about the rela-tive valuations individuals have made. It is important to note that economics focuses not on the internal psychological state of the individual but on the ex-ternal environment, the social and material condition which influence that internal state.
eBook - PDFEconomic Environment NQF4 SB
TVET FIRST
- D Bekker, M Richards, FHB Serfontein, A Smith(Authors)
- 2013(Publication Date)
- Macmillan(Publisher)
Basic economic principles Overview In this module you will … • Explain the concepts of scarcity, choice, efficiency, use of marginal analysis and opportunity cost. • Distinguish the concept of macro economics from that of micro economics. • Identify the common errors in economic thinking and sources of disagreement amongst economists. Range: Bias, fallacy of composition, cause and effect between economic variables, levels and rate of change, value judgements, interpretation of facts and data, opinion, the impact of time perspectives and ceteris paribus. • Explain the concepts of supply and demand and the elasticity of supply and demand with the use of a graphical illustration. • Identify the impact of different economic systems Range: Market economy, command economy and mixed economy. • Explain the role of the economy in producing goods and services. Range: Capital, entrepreneurship, labour and natural resources. 2 Topic 1 Module 1 3 Introduction In this module you will learn about basic economic principles that are used by economists when they discuss or explain economic issues. For example you will learn about the concepts of scarcity, choice, efficiency and opportunity costs as they pertain to economics. You will also be introduced to marginal analysis. The difference between micro and macro economics will be briefly explained, and you will be introduced to some common errors in economic thinking. This is followed by an explanation of the laws of demand and supply as well as the elasticity of demand and supply. You will then also look at the impact of different economic systems, specifically the market economy, the command economy and the mixed economy. Lastly you will be looking at the role supply factors play in producing goods and services in the economy. 1.1 Concepts in economics Scarcity Economics is often defined as the study of using limited resources to satisfy unlimited needs and wants .
eBook - PDF- Steven Landsburg(Author)
- 2013(Publication Date)
- Cengage Learning EMEA(Publisher)
C H A P T E R 19 What Is Economics? 19.1 The Nature of Economic Analysis Economics is one of several sciences that attempt to explain and predict human behavior. It is distinguished from the other behavioral sciences (psychology, anthro-pology, sociology, and political science) by its emphasis on rational decision making under conditions of scarcity. Economists generally assume that people have well-defined goals and preferences and that they allocate their limited resources so as to maximize their own well-being in accordance with those preferences. Stages of Economic Analysis Much of economic analysis can be divided into three stages. First, we make explicit assumptions about people ’ s goals and about the constraints on their behavior. This allows us to formulate an economic problem: Within the limits imposed by the constraints, what is the best way to achieve the goals? Second, we determine the solutions to these problems, and we see how the solutions vary in response to changes in the constraints. We assume that the individuals under study can also solve their economic problems and that they behave accordingly. We describe this by saying that the individuals optimize. Third, we examine the interactions among individuals: Each person ’ s behavior affects each other person ’ s constraints. In view of these interac-tions, we are often able to conclude that there is only one possible outcome in which all individuals are simultaneously optimizing. Such an outcome is called an equilibrium. We shall now examine each of these stages in more detail. Formulating the Individual ’ s Economic Problem The first step in economic analysis is to make explicit assumptions about individuals ’ desires and the nature of the constraints that they face. For example, we assume that a consumer has indifference curves that are convex toward the origin and must select a market basket that is within his budget line.
eBook - PDF- Graham Mallard(Author)
- 2017(Publication Date)
- Red Globe Press(Publisher)
3 introducing larger-scale analysis: the macroeconomic world the next four chapters In Chapters 5–8 we analysed the behaviour of individual actors and what results when they interact with one another in individual markets: what I refer to as smaller-scale analysis. We now put them all together to examine the functioning of the economy as a whole. We approach economics in a way that makes individual actors and markets blend into the bigger picture. This is larger-scale analysis. This is macroeconomics . Key term: macroeconomics Macroeconomics is the study of the economy as a whole: the bigger picture. The purpose of studying macroeconomics is for us to understand what determines how wealthy an economy is, and how that wealth can be increased; what causes the two main economic problems of unemployment and inflation, and how they can be reduced; and how economies interact with one another in the global marketplace and the benefits they derive from doing so. 3 3 introducing larger-scale analysis: the macroeconomic world 152 Introducing the bigger things is the purpose of the following four chapters. Working through them will enable you to read and understand the economic issues featured in any financial newspaper. It will also enable you to engage in current economic debates. For example, how wise is it for the government to be cutting its expenditure when the economy has just come out of recession? In what follows, then, we: 1 Introduce the economy and examine what determines its size and how this can be measured (Chapter 9). 2 Develop and use the tools of demand and supply analysis, but at the level of the whole economy rather than at that of a market (Chapter 10). 3 Investigate the causes and consequences of unemployment and inflation, and what the government can do to reduce them, as well as the role of money (Chapter 11).
eBook - PDF- Michael Veseth(Author)
- 2014(Publication Date)
- Academic Press(Publisher)
Parti The Economics of Exchange CHAPTER 1 SCARCITY AND CHOICE CHAPTER 2 SPECIALIZATION AND EXCHANGE CHAPTER 3 DEMAND AND SUPPLY: THE MICRO SIDE CHAPTER 4 MARKETS AT WORK 1 This page intentionally left blank 1 Scarcity and Choice This chapter introduces some of the basic problems with which economics deals. Questions that will be answered in this chapter include the following: What are the basic economic problems that face society? How do we deal with these problems? What is the role of economic growth? 3 4 SCARCITY AND CHOICE Economics: the social science that studies the production and distribution of goods and ser-vices in a world of scarce resources Scarcity: the situation that prevails when desires exceed resources Choice: the problem of deciding among several alternatives, not all of which can be obtained at the same time Economics is useful stuff, but economists sometimes seem like a pretty dismal group. Normal in most other respects, economists have the uncomfortable habit of finding dark clouds surrounding every otherwise silver lining. The economists' motto There is no free lunch is not a particularly friendly one. This seeming pessimism has something to do with the way that economists view the world. Given Aladdin's lamp (and the three free wishes that the genie provides) most people would dream only of the luxuries now available. To the economist, however, this seeming abundance is really a problem of scarcity. A world of wants and just three wishes! What dreams to fulfill? What wishes to forego? How to choose? To the economist, even Aladdin's lamp is a problem of scarcity and choice.
eBook - ePub- Ramesh Chandra(Author)
- 2019(Publication Date)
- Palgrave Macmillan(Publisher)
values , his ends, lie within the connected whole” (ibid., p. 4).Since economics is one of the social sciences, some writers regard it as a part of sociology, the general science of society (Ely et al. 1930 , p. 9). Economists generally refrain from expressing ethical or moral judgements. Economists analyse economic aspects of practical problems and the final judgement depends on a synthesis of moral, political, economic and other considerations. Moreover: “Above economic man stands the political man, free to limit and define the field of economic man’s activity, to impose conditions upon him, to prevent him from doing certain things, to encourage him to do others ” (Young 1927a ; Mehrling and Sandilands 1999 , p. 4).Since economics deals with man as he actually is, and not with an artificially constructed economic man, it cannot be completely divorced from ethics and politics. For example, in setting of fair and reasonable railway rates, apportionment of taxes, restrictive regulations and sumptuary laws, economic questions get interwoven with ethical, legal and political considerations. Although economics does not undertake a systematic study of law, ethics and politics, its conclusions may almost always be supplemented by non-economic factors which an economist may not have fully taken into account.Young viewed economic relations as a part of larger social picture (Mehrling and Sandilands 1999 , p. xiv). Economics is just one of the social sciences, and the final terms of economic inferences reach out to other systems of relations often non-economic in character. It is from these other relations that final terms of economics get their meaning and significance. Thus, if economics is to remain practically useful, these final terms need to be handled very carefully.Every social science is defined in terms of its problems but has its own orientation, scope and viewpoint (Young 1927a ; Mehrling and Sandilands 1999
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