Economics is a part of our everyday life. It is about economizing which means making the most of what we have and use it in such a way that gives us more benefit or satisfaction. In economics the term satisfaction is termed as utility…
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The second part of economics deals with the problems rising in the global arena. Humans have unlimited wants but there are limited resources to produce it and when we say resources this is basically referred as the four factors of productions that are used in producing wants. Human race is like an ever hungry beast whose wants are unlimited but there are limited resources to produce it. This issue is referred as scarcity because these resources like oil, mineral, gases take millions of years to form and human beings consume it with a century. (McConnell, 2011) We all know that every human possess some basic needs and beyond these needs there are wants that is only demanded to gain pleasure or to derive satisfaction.
Humans have no end to their wants but due to limited income we are forced to make choices as we cannot have whatever we want so we have to select the things we can afford and make sure that the thing we have selected gives us most benefit. When a choice is made one thing is given up in order to obtain what we have selected. The next best alternative that we gave up in order to obtain what we have selected is called opportunity cost. For example between a bike and an I-Phone 5 an individual chooses a bike in this case the I-Phone 5 is the opportunity cost. The concepts in economics can be factual or value based. Objective and fact based information is referred as Positive Economics while value based and subjective information is related to the Normative Economics. Positive economics could be tested and proved or disapproved while the Normative Economics are opinion based. (McConnell, 2011) Macroeconomics and Microeconomics Before we go into further analysis it is very important to discuss about the two major branches of economics and that is differentiating between Microeconomics and Macroeconomics. These two branches have many basic common ideas and methods in common, the difference lies in the level to which they are studied and the way they are perceived. Microeconomics focuses on individual consumers, workers and firms each of which is too small to have an impact on the national economy. Macroeconomics avoids this distinction among many different kinds of goods, firms and markets that exist in the economy and instead focus on aggregate. For example, in their analysis macroeconomists do not care whether consumers are buying VCRs or DVD players, beef or chicken, Pepsi or Coke. It focuses on summing up individual variables to obtain economic wide totals called aggregation. (McConnell, 2011) Issues affecting the economy as a whole Studying about the structure of the economy is a part of Macroeconomics that studies the performance of the national economy and helps in designing policies that government use to influence the economy. (McConnell, 2011) There are certain issues that affect the economy and the main ones are: Business Cycle Growth in an economy is never smooth, it
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