Economics
Have you ever wondered what exactly our economy is? How it works? How money circulates through it? What exactly is the economy and how does it relate to you? Economics can be defined as the study of the consumption of goods and services. At a basic level, economics studies how a society or community provides its inhabitants with the tools for survival: food, shelter and clothing. It may seem like a dry subject, but in reality nearly every part of a person's day-to-day life is of interest to economists.
Economics also examines what occurs in a society after basic needs are met. How does a society meet the demand of its inhabitants for consumer goods such as entertainment and transportation? What effects do the supply and demand of goods have on market conditions within this society? How does trade play a part in the society's growth? What effects are felt in times of scarcity and recession? All these questions and more are what the study of economics aims to address.
One of the first tasks a society must face in relation to understanding economics is determining market value. This starts by considering each commodity to learn what it is worth and how the demand for it affects its value. This can be illustrated by the following example. Two people are interested in purchasing the same car. One is moderately interested in the car but is not what salespeople would refer to as a “hot” buyer. However, the other wishes to purchase the car as soon as possible. In this way, we can see that the second buyer's demand for the car will ensure its seller receives a good price, This is known as the seller's utility and establishes a commodity's economic value according to its desirability.
Economics also concerns the study of markets. The market is where the common value of commodities is set and where all trading occurs. Anyone can buy and sell commodities, the price of which are set by buyer and seller based on supply and demand. If a commodity is scarce and highly sought after, its price will be higher. If it is plentiful, the price will usually be lower.
Other types of markets however operate differently than free markets do. The price may be set by a governing authority, such as the state. Regulated markets may also stipulate that only specific types of people, for example, qualified pharmacists, can sell certain commodities. As illustrated, economics has varying degrees of complexity and deals with subjects we directly experience on a daily basis. The following articles will examine economics and its role in society in further detail.
For more infomation on economics choose from the list below. |
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Banking - Business Finances - Economics - Insurance - Investing
Major Purchases - Personal Finances - Stock Market - Taxes
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