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Economics
Economics is a social science seeking to analyze and describe the production, distribution, and consumption of goods and services. That is, economics studies how individuals and societies seek to satisfy needs and wants. Alfred Marshall informally described economics as "the study of man in the ordinary business of life" in the late 19th century; the vast number of topics to which the methods of economic theory have been applied suggests to some that economics is simply "that which economists do."
Economics has two broad branches:
(1) microeconomics, where the unit of analysis is the individual agent, such as a household or firm
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(2) macroeconomics, where the unit of analysis is an economy as a whole. Another division of the subject distinguishes positive economics, which seeks to predict and explain economic phenomena, from normative economics, which orders choices and actions by some criterion. Such orderings necessarily involve subjective value judgments.
Economic reasoning has in recent decades been increasingly applied to social situations where there is no monetary consideration, such as politics, law, psychology, history, religion, marriage and family life, and other social interactions.
Finance has traditionally been considered a part of economics - as its body of results emerges naturally from microeconomics - but has today effectively established itself as a separate, though closely related, discipline.
There has been an increasing trend for ideas and methods from economics to be applied in wider contexts. Since economic analysis focuses on decision making, it can be applied, with varying degrees of success, to any field where people are faced with alternatives - education, marriage, health, etc. Public choice theory studies how economic analysis can apply to those fields traditionally considered outside of economics. The areas of investigation in economics therefore overlap with other social sciences, including political science and sociology. The most prevalent political economy is loosely called capitalism.
Mainstream economics begins with the premise that resources are scarce and that it is necessary to choose between competing alternatives. That is, economics deals with tradeoffs. With scarcity, choosing one alternative implies forgoing another alternative - the opportunity cost. The opportunity cost creates an implicit price relationship between competing alternatives. In addition, in both market oriented and planned economies, scarcity is often explicitly quantified by price relationships.
Economics is the study of human choice behavior. All of economics, whether represented through articulation or empirically through mathematical means, is essentially an analysis of the behavior choices of human beings.
Economics is a field of study with various schools and currents of thought. As a result, as in many other fields, there exists a considerable distribution of opinions, approaches and theories. Some of these reach opposite conclusions or, due to the differences in underlying assumptions, contradict each other. |
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