Economics is a complicated subject filled with a maze of confusing terms and details which are quite hard to explain. Even economists have trouble defining exactly what economics means. But there is no doubt that the economy and the things we learn through economics after our everyday lives. In short, economics is the study of how people and groups of people use their resources. Money is one of those resources, but there is the role of a lot of other things in economics.
To clarify all this, let’s have a look at the basics of economics and why you might consider studying this field.
Economics is divided into two general categories: microeconomics and macroeconomics. Micro explains the economy at the individual level, and macro depicts the facts about the whole economy. Thus, we can say that economics is a study of various subfield coming under it. These include econometrics, economic development, agricultural economics and urban economics. The students interested in the knowing the working of the world and how financial markets or industry outlooks affect the economy should consider economics as a subject in higher studies. Undoubtedly, it is the field that fascinates the students and has career potential in some disciplines from finance to sales to the government.
- The essential concepts of economics
Economics completely revolves around the money and the markets. It studies the willingness of the people to pay for something and the comparison of the industries. It also throws light on the economic future of the country or the world.
- Supply and demand
It is one of the most important things we learn in economics. Supply refers to the quantity of something which is available for sale, and the demand refers to the willingness to pay for purchasing it. If the supply is higher than the demand, the market is thrown off balance and costs typically decrease. But in the case when demand is higher than the supply available the cost increases because that commodity is more desirable and harder to obtain.
- Price elasticity
Elasticity is another critical concept in the economics. Essentially, the prices of the goods that can fluctuate before it has a negative impact on the sales. Elasticity ties into demand and some products and services are more elastic than others.
- Know about the financial markets
Most of the factors involved in economics are directly related to the financial markets. This is also a complicated matter which has many subtopics need to be dived in.
- Fixation of prices
The first and foremost thing to understand in it is how prices are set in a market economy. At the heart of this is information and what is known as a contingent contract. Essentially, this type of arrangement places stipulations on the price paid based on the external factors affecting it. Specific more complexities talk about the recession which can throw many things off.
For instance, just because an economy goes into recession, does not mean that price will fall. In fact, it is the opposite of things like housing. In such cases, prices usually go up because supply is down and demand is also up. Such situation of the rise in prices known as inflation.
- Interest rates
The rate of exchange and the rate of interest can also fluctuate in the market. You will often hear economists express concern over these. When interest rates go down, people tend to buy and borrow. This can also cause interest rate to rise in the end. Exchange rates refer to how the currency of one country compares to those of another. These are key components in the global economy.
Some other terms to be studied in economics are an opportunity cost, cost measure and monopolies. Each is a key element in understanding the overall economic forecast.
Nothing is simple in economics, and this is why this topic is so intriguing and keeps economists up late at night. Predicting the wealth of a nation or the world is no easier than predicting your gains into the future. There are too many variables that come into play, and this is why economics is an endless field of study.