Economics Defined with Types, Indicators, and Systems

Do you want to know what is economics?

I explained all it in very easy language and selected exam oriented topics also which you should know when you are doing study of Economics.

Introduction of Economics

Just as the resources of an individual are scare, the resources of the society are also scare in comparison to what the people in the society might collectively want to have. The scare resources of the people in the society might collectively want to have. the scarce resources of the society have to be allocated properly in the production of different goods and services in keeping with the likes and dislikes of the people of the society. Any allocation of resources of the society would result in the production of  a particular combination of different goods and services. The goods and services thus produced will have to be distributed among the individuals of the society.

Meaning of Economics:

Economics is derived from Greek word "OIKONOMIA" where 'OIKO' means "household" and 'NOMIA' means "management". This give the meaning of Economics as management of household. The effective birth of economics as as separate discipline may be traced to the year 1776, when the Scottish philosopher 'Adam Smith' published An Inquiry into the Nature and Causes of the Wealth of Nation. 
Economics is the study of how societies use scare resources to produce valuable commodities and distribute them among different people. 

Definition of Economics:

Economics is the study of scarcity and its implication for the use of resource; production of goods and services; growth of production and welfare over time; and a great variety of other complex issue of other complex issues of vital concern to society.

What are economic activity:

• All activities where money is involved is called economic activities like selling something or getting a job are economic activities. 

• Human activity not related to wealth are not treated in Economics like visiting religious purpose for prayer are not economic activity.

Subject matter of economics:

In Positive economics we do analysis of economic problems on the basis of facts and data and on the other hand 
In Normative economics we don't analysis of economic problems on the basis of  facts and data but by on different aspects like on social aspects, cultural aspects and political aspects.

Some other basic concepts in economics:

Goods and services

Meaning of goods in economics:

In economics goods that satisfy human want and provide utility  to a consumer making a purchase of a satisfying product for example purchase of air conditioner, television etc. There are four different types of goods like consumer goods, free and economic goods, capital goods and non durable goods.

Characteristics of Goods:

1. Tangibility: Goods can be touch or seen like television, machinery.

2. Perishability: Goods can be damage and have degree of durability like bread is a durable good and cup can be damage.

3. Separability: Goods can be store for later use like clothes.

4. Standardisation: The quality of goods can be controlled through standardisation and by process of grading like quality of a cloth can be given standard.

5. Transferability: Goods can be transferred to anyone else like we can transfer a mug to other person.

Types of Goods:-

1. Consumer good- Consumer goods are those goods which are purchased by the household or consumer for final consumption. They are not used for production production by him like television, car etc. There are also types of consumer good on the basis of their durability which are as follow:

1.1. Durable goods: These types of goods have a long life and used repeatedly for several years for example-Car, Mobile phone .

1.2 Semi-durable goods: These types of goods have short life span than durable goods which is one year or slightly more. For example clothes.

1.3 Non-durable goods: Single consumption goods are called non-durable goods. for example fruits, milk, vegetables etc.

2. Free and Economic goods: 

2.1. Free cost: Goods which have no opportunity cost in other words which can be used in much quantity as needed without reducing its availability for others. For example Air, Sunlight.

2.2. Economic goods: Goods which opportunity cost in other words they are limited quantity available and scare for which we have to spend money to use them. For example Car, Refrigerator. 

3. Giffen and Veblen goods:

3.1 Giffen goods: Goods which demand rises along with the price. These goods are necessary to fulfil the need for food and they have few substitute. For example: Bread, Rice etc.

3.2 Veblen goods: Goods of high quality premium goods,  the demand of which increase also along with price. For example: Sports car, Rolex watch, Expensive accessories. 

Characteristics of services:

1. Intangible: Services are cannot touch or seen. We can only feel it like banking services, Goodwill, Patents. They are all examples of intangible services.

2. Heterogenous: Services are provided different to different individual according to their culture and geographical background like music

3. Inseparable from their owner: Services can't provide same by other individual same as one . It can't be separate from their owner like a teacher can't teach same as a other teacher.

4. Perishable: Services can't be stored as good like you can't store banking services.

Sector/ Types of economics:

1. Primary Sector: In this sector economic activities take place while exploiting of natural resources like mining, agricultural activities. When the agriculture sector contributes half of the national income it is referred as agrarian economy.

2. Secondary Sector:  In this sector manufacturing is done. It consist of all the economic activities where raw material comes from primary sector is processed like sugarcane convert in sugar. When the secondary sector contribute in the half of the national income and employment it is referred as industrial sector.

3.Tertiary Sector: In this sector services are produced like education, health care etc. When the tertiary sector contribute half of the national income then it is called service sector

4. Quaternary Sector: In this sector education, research and development comes under it. It is also called Knowledge sector.

5. Quinary Sector: In this sector top decisions are made by highest level government, private cooperate sector.

Classification of Economics:

1. Microeconomics: It is the branch of economics that focus on the behaviour of individual unit like household, people, business and firm. It make economic decision on these individual units.

2. Macroeconomics: It is the branch of economics that deals with the economy as a whole which means it examine the economy on large scale. It studies the aggregates such as national income, inflation, unemployment, national income and taxes etc.