Thinking about what economics is, I would say that it is the science of scarcity. This discipline examines how different societies manage scarce resources to produce the best possible outcomes for individuals. Furthermore, the science of economics acquires its knowledge from studying human behavior. Individuals have unlimited wants, and economists must adjust to this predicament by making efficient use of all available resources.
Two subtopics related to economics are microeconomics and macroeconomics. Microeconomics examines individual factors in an economy such as individual firms and households, specifically household budgets and retirement savings. For each firm, microeconomics will look into the amount of products that each firm should produce and the pricing of each product. It will also examine how many laborers each firm should have. Conversely, macroeconomics examines the entire economy as a whole. Macroeconomics studies inflation, the rate of unemployment in the entire economy, as well as the goods imported and exported into the economy. Most importantly, macroeconomics will assess the total amount of earnings that the economy brings, also known as GDP. The GDP is then used by macroeconomists to assess the standard of living for each person in that society.
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Economics is studied through empiricism, thus all knowledge about economics derives from the human sensory experience. The role of an economist is to gather data about humans’ economic choices, assess economic trends for the prediction of future economic choices, and form economic theories accordingly. Celebrated economist Alfred Marshall quotes economics as the study of man in the ordinary business of life, it enquires how he gets his income and how he uses it. Thus, it is, on the one side, the study of wealth, and on the other and more important side, a part of the study of man. For instance, economists will examine the rate of unemployment, inflation, and pollution to analyze how society can be more efficient with its resources. Empirical data observes these societal trends and conducts experiments through the implementation of different economic policies.
Economics consistently strives to maximize the productivity of society in order to improve the standard of living of each person and their well-being. It plays a vital role whereby it acts as a national defense, addresses the concern of the environment, enhances property rights, and makes the economy a better place to compete. With economic development, people get to consume more goods and services. People get employed when institutions are instituted, increasing the country’s GDP. Thanks to economics, we know how to best allocate resources.
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