It’s More Than Just Numbers: Economics in a Nutshell
by: Damielle Ofqueria
What is the first thing you think of when you pass by the word “economics”? Is it the stock market? The numbers and prices? Well, both of these are correct. However, despite what most of the public may think, economics isn’t actually only limited to the market or commodities and is more than that! Truth be told, we are surrounded by economics. In this world where most of the resources are scarce and people have unlimited wants, economics is the very topic you would need to ponder.
Economics is a social science concerned with the production, distribution, and consumption of goods and services (Hayes, Economics 2021). It is the study of how individuals, businesses, governments, and nations make choices about how to allocate resources. It’s also not limited to business but also rather present in many other fields, including political science, geography, mathematics, sociology, psychology, engineering, law, and medicine. Based on the assumption that humans act rationally, economics focuses on our actions that seek the highest level of benefit or utility. For there are many ways on how to apply human labor and various ways to acquire resources, it is the task of economics to determine which methods yield the best results. The study of economics is generally too broad, but it can be broken down, however, into two primary disciplines. Macroeconomics studies the interactions in the economy as a whole. This includes inflation, price levels, rate of growth, national income, gross domestic product, and changes in employment rates. It studies an economy on both a national and international level. On the other hand, microeconomics focuses on how individual consumers and firms make decisions; these individual decision-making units can be a single person, a household, a business/organization, or a government agency (Hayes, Economics 2021). Microeconomics basically studies the implications of the action of each individual. Achieving the most satisfactory allocation of one’s resources is essential and studying problems regarding allocation improves our ability to make both daily and life-long decisions. Basically, by studying the way that people make choices, the better choices we would make.
In the 20th century, Lionel Robbins, an English economist, gave economics the definition as “the science which studies human behavior as a relationship between (given) ends and scarce means which have alternative uses.” (Blaug, Economics 2020). The principle, as well as the problem, of economics is that human beings have unlimited wants and occupy a world of limited means or a world with scarce resources. Economics shows us that the concept of scarcity forces every single individual to make choices, and these particular choices always come with a cost. It is delineated whenever the demand for a good or service is greater than the availability of the good or service. Due to this, the choices that are available to the consumers, to us, are limited. Scarcity guides us in making our daily decisions in life. Since there are limited resources and unlimited human wants, there is always a cost once we decide or pick a choice over another. A “balance game”, one might call it, but one where you would need to properly weigh and consider the costs and benefits of the options available against the others. The very existence of scarcity means that there is always an opportunity cost in every choice we make. It doesn’t matter whether it is monetary or not, there is always a “price” in every choice and decision we make. The choices we make on the use of our scarce resources largely determine what needs and wants we would be satisfied with and how much satisfaction we, the consumers, would get. This is one of the key concepts of economics.
In the national calendar, October is officially the “National Economic Education Month”. I hope that through reading this article, you were able to understand a thing or two on what economics, in a nutshell, is all about. Economics is not just a collection of facts to be memorized but rather a pack of important concepts to be learned. A basic understanding of economics and its principles will make you a well-rounded, as well as a more educated, thinker and decision-maker. The study of economics may not dictate to you all the correct answers, but it can help illuminate the different choices you are being presented within the several balance games you would encounter in your day-to-day life. After all, economics is more than just numbers.
References:
· Blaug, M. (2020). Economics. Encyclopædia Britannica. Retrieved October 14, 2021, from https://www.britannica.com/topic/economics.
· Fernando, J. (2021, October 13). What is opportunity cost? Investopedia. Retrieved October 14, 2021, from https://www.investopedia.com/terms/o/opportunitycost.asp.
· Hayes, A. (2021, October 12). Economics. Investopedia. Retrieved October 14, 2021, from https://www.investopedia.com/terms/e/economics.asp.
· National Geographic Society. (2020, August 10). Scarcity. National Geographic Society. Retrieved October 14, 2021, from https://www.nationalgeographic.org/encyclopedia/scarcity/.
· Michele. (n.d.). National Economic Education Month — October. National Day Calendar. Retrieved October 14, 2021, from https://nationaldaycalendar.com/national-economic-education-month-october/.
· OpenStax. (n.d.). 1.1 what is economics, and why is it important? Principles of Economics. Retrieved October 14, 2021, from https://opentextbc.ca/principlesofeconomics/chapter/1-1-what-is-economics-and-why-is-it-important/.
· What is economics? Department of Economics — University at Buffalo. (2019, February 7). Retrieved October 14, 2021, from https://arts-sciences.buffalo.edu/economics/about/what-is-economics.html.
