Managing The Scarce Resources is What Economics Deals With

What is Economics?

Economics is the study of, How to manage the scarce resources in a society. Resources allocation is dependent on how people make decisions, how much they work, what they buy, how much they save and how they invest their savings. Economics is all about behaviour. Economists also study how people interact each other.

Principles of Economics:

People Face Trade-offs

If you want something, you have to give up something else you want. Normally in our society this quite common with middle level range of families. They can offer only one thing at a time. Efficiency and Equality is another trade off which society faces. Efficiency is getting the maximum benefits from a scarce resources. Equality is that resources are distributed equally among the society. The poor should get maximum benefits from the society.

What You Give Up to Get It Is The Cost of Something

Opportunity cost of an item is called as the cost of something is what you give up to get it.  The athletes can earn money if they directly get into practice and shaping themselves. So, they invest in that rather than in education.

Rational People Think at the Margin

The people who systematically think and purposefully do their best to achieve things are rational people thinking at their margin with the available opportunities. 

In exams, rational people think how to use their time in studying and to revise rather than chatting with friends or watching TV.

People Respond to Incentives

An incentive is an extra benefit given to a person in his act of work. Because, some people respond to  incentives and it's benefits. This plays an important role in economics.

A person buys more items if he/she gets an offer. On the other hand, company also gets profits and manufactures more products with hiring more number of work force.

Supply and Demand:
Supply is the quantity of goods and services to be sold. Demand is the willingness of people to buy the product. If the supply goes up, the price of the product goes down and demand may be increased because of its low cost.