Economics

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What is Economics?
Introduction
Typically, economics can be defined as studying how folks choose to utilize resources; that comprise the land, equipment, talent and time folks have available, as well as other tools on hand, and expertise of combining those above in creating valuable services and products. However, for valuable products to be realized, vital choices have to be arrived at.
Vital choices comprise of how much time should be devoted to school, work, and to leisure, how much should be spent and how much should be saved, combination of available resources in producing quality products, as well as voting and shaping tax levels and government roles. In most cases, people use resources they possess to advance their well-being; which involve that satisfaction derived from the use of goods and services consumed, from the time spent with family/community or in leisure as well as services such as security that their government provide. However, sometimes folks tend to utilize their resources in a way that rarely advance their well-being.
Therefore, economics can be said to be the study of factors of production like land and labor as well as investments of income, money and production, government taxes and expenditures. From the definition, it is apparent that economists aim at measuring well-being, learning ways in which well-being might increase with time, and also evaluating the rich and poor’s well-being. Hence, through economics a connection between scarce means and unending wants is drawn.

What Economics Involves
Wealth and welfare connotation
These two terms are separated into Adam Smith’s classical view and Marshall’s Neo-Classical views. Discussions are as follows:
Classical view and Contemporaries
Adam Smith, who was a classical economist, defined economics as a science that is concerned with wealth. His definition proposes to enrich sovereign and its people. However, Smith’s view was disingenuous and has adverse defects. The view of economics conception as a science of wealth imposed elite stress on material wealth-which can be said to be man’s material of desire. Through a serious emphasis on “material wealth”, Smith concentrated on scopes of economics through the exclusion of all material activities relating to production of non-material products e.g. accountants and engineers.
Neo-Classical views and Contemporaries
Neo-classical ideas were first proposed by Alfred Marshall; his views left all the economists in a sound position among social science. Unlike Smith, Marshall emphasized on the welfare of a man. Wealth was viewed as the human welfare basis. Marshall regarded Economics or Political Economy as a studying mankind in the normal business of life. Economics reviews that part of a folk and the associated social activities that are most closely associated with achievements and with the use of well-being’s material conditions. Neo-classical contemporary is: it excludes all activities that are not accepted in the society like theft and misers.
Scarcity
Robbins was of the view that, economics is a science concerned with the study of human behaviors that relate to ends and scarce means having alternative uses. Hence, it is important to make choices when dealing with scarce resources.
Market Equilibrium
In economics, equilibrium is one vital concept. It is a state of the market where market supply equals demands in the market. During this situation, the equilibrium price is obtained in the market. At market equilibrium, prices remain constant unless external factors are imposed on demand or supply thus resulting in disruption of equilibrium. When the market price is exceeding equilibrium mark, it translates to excess or surplus market supply, meaning more supply as compared to demand. Conversely, the market price that is below equilibrium mark suggests that there is a shortage in supply or excess demand for market goods and services.
Micro-Economics and Macro-Economics
The former is concerned with studying specific segments, and markets of the economy. It studies individual labor markets (wage determination, demand for labor), consumer behavior (choice consumer theories) and theory of the firm. On the other hand, the latter is concerned with the study of the entire economy. It analyzes the ‘aggregate’ variables like national output, aggregate demand, economic growth, fiscal policy, international trade, government borrowing and inflation.
Nature and Scope of Economics
Divergent notions concerned with the scope of economics have emerged due to unending developments in the subject matters of economics. It encompasses Economics as an Art or Science, subject matter of economics, or a normative/ Positive science.
Subject matter of economics
Involve the grounds of material interest or study of the science of wealth. Furthermore, it studies men who are reasonable humans and take actions under active, legal, social and institutional group. It does not take into account manners and performances of socially uncharacteristic and objectionable folks like thieves or misers. Precisely, it involves the study of production, consumption, exchange and distribution of wealth. Moreover, it also focuses on the amount of employment, value of products and fiscal development determinants. Consequently, the subject matter of economics looks into unemployment, inflation, under-employments and poverty and how best to eliminate them.
Economics as a science
Since the laws used in economics have widespread relevance, it is regarded as a science. Such laws include the law of demand, diminishing marginal utility, diminishing returns and so on. Its self-redial nature makes it be a science. Therefore, just like any other science, economics has its generalizations, laws or theories that draw out the casual relationship among varied phenomena.
Economics as an Art
The Art of economics comes in when scientific techniques are applied practically. A section of economists regards it as an art and science whereas few of their colleagues regard it as a science and applied science. Hence to reconcile these two views, economics can be said to be newest science and oldest art and all social sciences’ queen.
Economics as a positive science
Experts in the 19th century considered economics as a positive science. It was for the reason that it pursues to explain what happened as opposed to what is ought to take place.
Normative Economics
As opposed to positive science, this science explains “what should happen” scenarios. It means that normative economics aims at predicting future economic developments with respects to prevailing current conditions. Furthermore, it looks at hypotheses on which economic theories, laws or ideologies relate to man and his difficulties.
How Economics applies to our Daily Lives
Several principles of economics are vital in our lives, and we cannot avoid them. The principle of scarcity is important in each person’s life; there are unlimited time and resources, and, therefore, people are forced to make sound choices of how to best allot what we have. Students in college will be forced to balance studying, sleep and socializing.
Besides, opportunity cost is vital when making choices; when giving up on competing things to get what is best. For instance, when one decides to choose to study instead of partying with friends, the opportunity cost becomes revelry with friends.
Sunk costs are present in our day to day life. Refer to already incurred costs, that no matter what, they cannot be reversed. A good example has a gym membership that has never been utilized or even already purchased car.
Lastly, the law of diminishing returns is also a common scenario in people’s life. An increase of a single factor of production while holding other constant will result in overall returns diminishing after a particular point. In real life, when bringing in more and more workers to harvest a maize field, at a particular point, each extra worker will contribute relatively less output than his or her precursor. It is simply because each worker has less and less of the land that is fixed to harvest.
Conclusion
Throughout the paper, economics is closely concerned with the well-being of humans as well as ethical values. It is also an art & science, because of application of scientific principles that are practically applied. Furthermore, economics is a normative and positive science because both the actual occurrences and future happenings are explained. Lastly, economics also affects us in our day to day life-it is seen in the manner in which it analyzes unemployment, inflation, production, consumption and distribution of goods and services that we use. It is, therefore, important to understand economics both as a subject and a life science; the theories explained by economists explain it all.