Economic system
Economics is a social science,
like history, geography, politics, psychology and sociology. It is
the study of human efforts to satisfy what seems like unlimited and
competing wants through the careful use of relatively scare
resources. It studies the most important aspects of our linked with
production, distribution, exchange and consumption of welfare.
The principles of economics lay
the foundations for the way we transact business. The principles of
economics underpin all commercial transactions. An understanding of
these principles is therefore essential if you are to understand how
the business world works.
Economic as a science consists
of two disciplines that is of macroeconomics and microeconomics.
Macroeconomics is study of
“global” or collective decisions by individual households or
producers. It looks at a national or international economy as a whole
– e.g. total output, income and international trade etc. In
macroeconomics we examine forest not the trees.
Microeconomics deals with
analysis of specific economic factors and detail study of their
behavior. It studies individual producers, consumers and markets.
Besides microeconomics tries to understand what factors affect the
prices, wages and earnings. Therefore, the focus of microeconomics
study are price or production of a certain product, number of
employees, profit or income and expenses of firms or households.
