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Economics is the field of analysis in social science that attempts to understand and describe the manufacturing, distribution and utility of wealth in a society. Since the beginning of the 19th century economists have written down various definitions of economics explaining how the various financial and non-financial assets tend to influence the performance of a specific economy. Importance of these scriptures was understood by the legislative bodies much later. In the wake of the 21st Century we hardly discover any private firm or national government who does not consult with economists for advisory services and market research purposes. The definitions of economics given by British economist Lionel Robbins are revolutionary in formulating strategic long-term economic plans. According to him, Economics is a principle that overviews human rational behaviour as a moderator between scarce modalities and ends that showcase different utilities. Another British author, Sir Alfred Marshall wrote in his book “Principles of Economics” that the subject is simply a study of human relationships in the day to day businesses of their lives. All these definitions of economics construct a great sense in the modern world. Experts in economics work as accountants, marketers and business administrators as their knowledge fulfills the aim of a firm or public organization to establish themselves in an economy.
Economic Concepts
Understanding the vast range of economic concepts favours us to gather knowledge regarding our purchase decision making powers. The upcoming discussion revolves around the key features of economic terminologies. Each of them governs the human purchasing nature in daily life.
- Scarcity –This term indicates a fundamental issue of microeconomics. In simple words, it is the supply gap between higher demand and limited availability of desired resources. Under these criteria, each individual prioritizes his basic necessities before paying attention to auxiliary requirements. Thus he can likewise budget his paying capacity for a period of time. Economists often refer to this as paucity. Money as a resource can also be subject to scarcity. Intangible resources like time can also be scarce for people who always remain busy while working. However natural ingredients that are readily available on earth do not exhibit a good source of scarcity as they procure little to no cost. One such resource is air. Primary reasons that lead to scarcity are structural, demand or supply induced economy. Structural scarcity is the most severe that erupts when a specific group of a society lacks sufficient access to resources. Supply induced scarcity emerges due to low supply volume as compared to demand. Demand scarcity takes place when supply is plenty but there are not enough buyers.
- Supply and demand –These two terms go hand in hand to govern the purchase patterns of population constituting a society. None of the concepts last for a long span of time. Let us understand with an example. Barley has been used since ages to produce varieties of breads in Europe. Now the bread production using barley has achieved a global scale. We also know that malted barley is the primary ingredient for whisky preparation. If in a certain society, the people’s demand for whisky rises quite significantly, the breweries can charge more prices to cover up their excise. However after a few business cycles more companies who were probably dealing in bread till then are bound to grab this opportunity and occupy the alcohol market. This will increase the surprise and prices will drop accordingly. The key features of economic terminologies expressed here are time limitation and partial consideration of stock.
- Cost and benefits connection –Rational behaviour of consumers govern the cost of commodities or services in a market. People tend to compare the value they are getting for the money spent in purchasing products from similar sellers. In doing so, they decide to establish a trade relationship with the seller who provides them the best benefit to cost ratio. For example, a person will buy a cheaper wooden chair from a furniture store whose goodwill is almost the same as his local market competitor.
- Role of incentives –These are financial or non-financial rewards given to an employee to motivate him in pushing sales of goods and services in a scenario of high demand.
Conclusion
Definitions of economics have been defined in this article to help the readers understand the responsibilities of economists in guiding businesses and individuals. The economic terms that we commonly come across in the modern world are incentives, supply and demand, cost – benefit relation and scarcity.
