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Basic Fundamentals of Economics You should Know

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The word Economics is derived from the Greek word “Oikonomia” meaning household management. It’s a detailed study of various arrangements. That mostly includes the production, distribution, and consumption of different goods and services. In other words, we can say economics is a part of social science that covers all the aspects of consumer behavior from production to decision making and can also get economics homework help. Apart from this, it also helps in satisfying human needs up to a maximum level by using a limited number of resources. 

Economics is divided into two parts  Microeconomics and Macroeconomics .which are generally considered as the fundamentals of economics. you can also say whole economics depends on these two subjects.

Microeconomics:

It is a branch of economics that studies human behavior and helps in making decisions regarding the allocation and utilization of resources. It focuses more on firms and individuals and provides us detailed information regarding. How individuals and businesses cooperate in the process of the exchange of goods and services. 

Macroeconomics:

It is a branch of economics that studies the overall economy dealing with the performance, structure, behavior on a large scale. It stresses more on the economy’s growth and structure considering different factors . 

Fundamentals of Economics

Microeconomics and macroeconomics are the two basic fundamental principles. That lay the foundation of economics as a subject. However, there are many other aspects. That you need to keep in consideration while studying economics. Fundamentals of economics include a lot of things like Nature of economics, Demand and Supply, Scarcity, Cost and Benefit, Inflation, and much more. 

I will try to my best explain to you every aspect of economics in detail. so that you will get a proper idea about the fundamentals of economics.

Nature of Economics:

Economics is a scientific study of the exchange of resources. That uses different methods of the behavior of humans, identifies their needs, and tries to fulfill those needs in a limited number of resources..

Economics as Science:

Studying economics as science helps you to develop an effective relationship between price, supply, demand, and various other economic factors. That are responsible for the overall growth of an economy. It also contributes to combining various sections of science such as mathematics, statistics, etc. 

Economics as an Art:

Art is considered a practical application of knowledge for achieving particular goals. On the other hand, economics consists of different segments like production, distribution, delivery, consumption, finance, etc. All these segments help in solving complex problems of both consumers and society.

Demand & Supply:

Supply and demand are considered the most important fundamental principles of economics. Demand depicts the relationship between the price of the good and its demand by the consumer depending upon their needs. In simpler words, we can say that demand is the actual quantity of a product. That the buyer is willing to purchase at a specific rate. On the other hand, supply depicts the relationship between the price and the available supply of that particular item from the perspective of the consumers. In simpler words, we can say supply is the actual quantity of goods. And services that a seller is willing to sell at a specific rate. 

  • When the price is high, consumer demand decreases. It is called as law of demand.
  • When the price is high, the supply from the manufacture’s end will be higher. It is called as law of supply

Scarcity:

Scarcity refers to the basic economic problem. It determines a gap between the limited availability of resources in comparison to the limitless wants. It forces people to make decisions and allocate resources in such a way. so that it meets the demand of society to a certain extent. Scarcity also arises when there is a huge demand for a product .But its supply is very less in comparison.

Cost-Benefit Analysis:

Cost-Benefit Analysis is a systematic way most businesses use to analyze their decision-making process. It also helps to compare the costs and benefits of a government policy. From the perspective of the consumers or society as a whole. In other words, we can say, it compares the value of different goods and services. That people use to increase the ratio of their benefits to costs in their decision-making process.

Inflation: Inflation refers to a situation where we see arise in the prices of most goods and services of daily use like food, clothing, house, transport, etc. Apart from this, inflation also affects the cost of living. when inflation is high. the cost of living also gets higher. which automatically leads to a decrease in the economic growth of a country.

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