Economics is the study of ...... | Economicstool

Economics is the study of how people use scarce resources to produce valuable goods and services and distribute them among different individuals. In other words we can say that every individual in society is engaged in the production of some goods or services but He wants a collection of many types of goods and services to fulfill his needs. Needless to say that there have to be some compatibility between what people in society collectively want to have and what they produce.

What is economics in social science?

Economics is a social science that examines how people choose among the alternatives available to them. It is social because it involves people and their behavior. It is a science because it uses, as much as possible, a scientific approach in its investigation of choices.

What is economics in simple words?

Economics is the study of Production, exchange and consumption of goods and services because they are the basic economic activities of our life. Under these basic economic activities, every society have to face scarcity of resources and scarcity of resources increases the problem of choice. The scarce resources of an economy have multiple usages. In other words we can say that every society has to select the way to use its scarce resources. We have to face some problems while we study economics here are some of them:-

The Problems of Economics

What is produced?

In the answer of the question what is the study of economics? we can say that economics is the study of what to produce. We have to do selection between having more agricultural goods or to having industrial products and services. Whether to use more resources in education and health or to use more resources in building military services. Whether to have more of consumption goods or to have investment goods. That's why in the starting of every financial year government of every country introduce there budget.

How  goods produced?

We also have to take a decision on How goods will produce like  how much of which of the resources to use in the production of each of the different goods and services. Whether to use more labor or more machines. Which type of technologies will adopt in the production of each of the goods?

For whom goods produced? 

Economics is the study of how produced goods will distribute in the society.Who gets more and who gets less?  Whether or not to give a minimum amount of consumption for every individual in the economy. Whether or not elementary education and health services should be provided freely for every individual in the economy. Thus, every economy have to  face the problem of allocation of the scarce resources to the production of different possible goods and services and of distributing the produced goods and services among everyone within the economy. The allocation of scarce resources and the distribution of the final goods and services are the central problems of an economy.

Micro vs Macro Economics

Economics has been divided into two main parts i.e. Microeconomics and Macroeconomics. Economics is the study of both micro and macro economics. In microeconomics, we study the behavior of individual economic agents in the markets for different goods and services. On the other hand, In macroeconomics, we try to get an understanding of the economy as a whole and focus on total output, employment and aggregate price level.

 Micro economics is the study of an individual person of our society or  on a firm not on industry because study of an industry is the subject matter of macroeconomics. Macro economics is the study of aggregate economy in this we study about national income,employment,general price level of economy,inflation/deflation etc.

Positive and Normative Economics

Professor Robbins was the one who mainly focus on the question,economics is a positive or a normative science. 

A positive science deal with 'what is' and a normative science deal with 'what ought to be'. Robbins think that economics is concerns with 'what is' which is not deal with moral or ethical questions but economics is neutral between ends. The manufacture and sale of cigarettes and wine may be injurious to health and morally unjustifiable, but both satisfy human wants and involve economic activity.

Economics is a positive rather than a normative science. it seeks to explain what naturally happens and not what ought to happen. This view was held even by the nineteenth century economists.Almost all leading economists from Nassau Senio and J.S. Mill onward had declared that the science of economics should be concerned with what is and not with what ought to be.

Marshall believed that "economics science is chiefly valuable neither as an intellectual gymnastic nor even as a means of winning truth for its own sake, but as a handmaid of ethics and a servant of practice." In this age of planning when all nations aspire to be welfare states, it is only economist who is in a positions aspire to advocate,condemn and remedy the economic ills of the modern world.

Different economists have different opinion about this question of positive and normative economics. Thus, we may conclude that economics is not only a positive science of what is but also a normative science of what ought to be because we need economical developments but in the same time we also not want to loss our moral or ethical values.