Economics deals with the laws and principles that govern the workings of an economy and its various parts. An economy exists because of two basic facts. First, human needs for goods and services are unlimited, and second, productive resources to produce goods and services are scarce. Therefore, an economy has to decide how to use its scarce resources to obtain the maximum possible satisfaction from the members of society. It is this basic problem of scarcity that gives rise to many of the economic problems.
There has been much controversy among economists about the true content of economic theory or its topics. The subject matter and scope of economics have been defined in various ways. Each definition is incomplete and inadequate, and due to various conflicting definitions, some confusion has been created about the nature and scope of economics.
The topic of economics has been divided into two parts: microeconomics and macroeconomics. In Microeconomics we study the economic behavior of an individual, company or industry in the national economy. Therefore, it is a study of a particular unit rather than all units combined. We mainly study the following in microeconomics:
1) Product price
2) Consumer behavior
3) Factor prices
4) Economic conditions of a part of the town
5) Study of a company and
6) Location of an industry.
In macroeconomics, we study the economic behavior of large aggregates, such as the general conditions of the economy, such as total production, total consumption, total saving, and total investment in it. It includes:
1) Income and national production
2) General price level
3) Balance of trade and payments
4) External value of money
5) Savings and investment and
6) Employment and economic growth.
The problem of scarcity and decision making can be represented using the production possibilities curve tool. The basic economic problems of what, how and for whom to produce can be solved in many ways by an economy. If you give the entire charge of the economy, to private property we have the capitalist economy, to public property we have the socialist economy and together with private and public property we have the mixed economy.
