Economics Basics
AAA
  1. Economics Basics: Introduction
  2. Economics Basics: What Is Economics?
  3. Economics Basics: Production Possibility Frontier, Growth, Opportunity Cost and Trade
  4. Economics Basics: Supply and Demand
  5. Economics Basics: Elasticity
  6. Economics Basics: Utility
  7. Economics Basics: Monopolies, Oligopolies and Perfect Competition
  8. Economics Basics: Conclusion

Economics Basics: Introduction

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.

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."

Economics Basics: What Is Economics?

  1. Economics Basics: Introduction
  2. Economics Basics: What Is Economics?
  3. Economics Basics: Production Possibility Frontier, Growth, Opportunity Cost and Trade
  4. Economics Basics: Supply and Demand
  5. Economics Basics: Elasticity
  6. Economics Basics: Utility
  7. Economics Basics: Monopolies, Oligopolies and Perfect Competition
  8. Economics Basics: Conclusion
RELATED TERMS
  1. Deflationary Spiral

    A deflationary spiral is when a period of decreasing prices (deflation) ...
  2. Negative Interest Rate Policy (NIRP)

    A negative interest rate policy (NIRP) is an unconventional monetary ...
  3. Nordic Model

    The social welfare and economic systems adopted by Nordic countries.
  4. Welfare Capitalism

    Definition of welfare capitalism.
  5. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
  6. Global Recession

    An extended period of economic decline around the world. The ...
  1. How does economics study human action and behavior?

    Find out why economics can be considered a deductive social science, like sociology, and how human action and behavior informs ...
  2. What is the difference between accounting and economics?

    Discover the difference between accounting and economics by comparing and contrasting the financial discipline of accounting ...
  3. How were nominal interest rates in the economy set before the Federal Reserve?

    Learn more about how nominal interest rates are determined, how the Federal Reserve targets them, and how they acted prior ...
  4. What can cause price deflation?

    Learn what price deflation is, how inflation rates can be calculated using the consumer price index and what some causes ...

You May Also Like

Related Tutorials
  1. Economics

    The Federal Reserve

  2. Economics

    Macroeconomics

  3. Personal Finance

    Microeconomics

  4. Retirement

    All About Inflation

Trading Center