It is in this context that a large part of microeconomic theory is concerned with showing the nature of departures from perfect competition and, therefore, from welfare optimum economic efficiency. The study of economics is important because without it we would notbe able to understand the impact of the developments in business,society, and the world economy. The imposition of a tax on a commodity i. Now, a sure economist will need to know how people producers, consumers are affected and how they affect decisions made. The remainder either thought prices were set by the monetary policy of the Federal Reserve or did not know. Just five in 10 youth knew that the prices of most products in a competitive market were determined by supply and demand. If it is assumed that resources are optimally allocated or maximum social welfare prevails before the imposition of a tax, then it can be demonstrated by micro-economic analysis that what amount of the damage will be caused to the social welfare.
Giving students £4,000 a year to spend at university may be a noble ideal. The subject involves, understanding what happens in markets and the macro-economy, examining statistics about the state of economy and explaining their significance, understanding different policy options and evaluating their likely outcomes. Microeconomic analysis is also useful applied to the various applied branches of economics such as Public Finance, International Economics. Under developed countries are facing many problems like unemployment , over population low per capita income and low production. Every field of study has its own language and its own way of thinking.
These countries have now learnt to make five year development plans for the optimum allocation of resources. Economic literacy contributes to a second class of knowledge. Economics is concerned with the optimal distribution of resources in society. This is another principle used for resources in which the scarce resources are utilized efficiently, after calculating and checking the opportunity cost. By the study of economics we can learn rational approach in the use of resources.
However there are significant changes going on and with a lot of academic honesty one can manage to arrive at a semblance of the truth. People like to think and talk about the economic issues that affect them as consumers, workers, producers, investors, citizens and in other roles they assume over a lifetime. It also allows us to comprehend the decisions of households, firms,and government based on human behavior, beliefs, structure,constraint … s, and needs. It's the part of economic theory which studies the economy in its totality or as a whole. Political stability Political stability is a basic pre requisite for the economic development of a country because it enables the government to carry out long term economic policies. Unemployment, deficit in the balance of payment, the structure of taxes, agricultural, industrial, monetary and fiscal policies of the government affect all the people living in a country.
Microeconomic theory reveals than when the externalities exist, free working of the price mechanism fails to achieve economic efficiency, since it does not take into account the benefits or harms made to those external to the individual producers and the consumers. This can help them to raise their standard of living. The combined results of these two determine the actual effect of economics on people. If you choose something over another thing, then what loss you sustain is the opportunity cost. When you get more information you also learn how money affect people in some way. Thus, the study of economics has enabled them to protect their rights.
It sharpened my ability to critically assess information, deliver disciplined and well structured arguments and become a more confident team player. Economic forecasts are more difficult than understanding the current situation. It describes how the economy as a whole functions and how the level of national income and employment is determined on the basis of aggregate demand and aggregate supply. According to economics labor is the measurement of the work that is done by the human beings. Everyone is a part of economy and everyone uses the rules of economy too.
An economist can suggest a tax on driving into towns to internalise the externality. Without the knowledge of the working of the economic systems, administration will not be effective and it may even be impossible. Study of Economics helps to frame law The knowledge of economics is very essential for the legislators and parliamentarians. Economics is how we as humans efficiently allocate scarce resources. Is inequality necessary to create economic incentives or does inequality create more economic problems? Our mission is to provide an online platform to help students to discuss anything and everything about Economics. The Great Depression of 1929-1933 exploded the myth that an automatic working of market mechanisms would ensure an equilibrium level of income consistent with full employment of resources. Study of macroeconomics has revealed not only the glaring inequalities of wealth within an economy but has also shown the vast differences in the standards of living of the people in various countries necessitating the adoption of important steps to promote their economic welfare.
About the Author Jason Chavis has been a professional freelance writer since 1998. It is an organization that provides living to the people. For example, during depression, when the machines lie idle and men roam from pillar to post in search of employment, macroeconomics helps us to analyze the cause leading to depression and unemployment and to the adoption of suitable policies to cope with such a situation. There are now many high quality textbooks and supplementary materials for instruction. The world in which we live comprises limited wealth, resources as well as time. That is why government of Pakistan and India is taking up concrete measures to solve the problems.