The Basic of Economics
Economics may appear to be the study of complicated tables
and charts, statistics and numbers, but, more specifically, it is the
study of what constitutes rational human behavior in the endeavor to
fulfill needs and wants.
As an individual, for example, you face the problem of having only
limited resources with which to fulfill your wants and needs, as a
result, you must make certain choices with your money. You'll probably
spend part of your money on rent, electricity and food. Then you might
use the rest to go to the movies and/or buy a new pair of jeans.
Economists are interested in the choices you make, and inquire into why,
for instance, you might choose to spend your money on a new DVD player
instead of replacing your old TV. They would want to know whether you
would still buy a carton of cigarettes if prices increased by $2 per
pack. The underlying essence of economics is trying to understand how
both individuals and nations behave in response to certain material
constraints. ((To learn how economic factors are used in currency
trading, read Forex Walkthrough: Economics.)
We can say, therefore, that economics, often referred to as the "dismal science", is a study of certain aspects of society. Adam Smith (1723 - 1790), the "father of modern economics" and author of the famous book "An Inquiry into the Nature and Causes of the Wealth of Nations", spawned the discipline of economics by trying to understand why some nations prospered while others lagged behind in poverty. Others after him also explored how a nation's allocation of resources affects its wealth.
We can say, therefore, that economics, often referred to as the "dismal science", is a study of certain aspects of society. Adam Smith (1723 - 1790), the "father of modern economics" and author of the famous book "An Inquiry into the Nature and Causes of the Wealth of Nations", spawned the discipline of economics by trying to understand why some nations prospered while others lagged behind in poverty. Others after him also explored how a nation's allocation of resources affects its wealth.
To study these things, economics makes the assumption that human
beings will aim to fulfill their self-interests. It also assumes that
individuals are rational in their efforts to fulfill their unlimited
wants and needs. Economics, therefore, is a social science, which
examines people behaving according to their self-interests. The
definition set out at the turn of the twentieth century by Alfred
Marshall, author of "The Principles Of Economics" (1890), reflects the
complexity underlying economics: "Thus it is on one side the study of
wealth; and on the other, and more important side, a part of the study
of man."
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