This article introduces the essence of the subject of Economics, its origin, subject matter and methodology and delves into the various aspects of the Economic science.
There are many things that people want and even more. People basically wish to have access to their basic needs such as food, clothing, and shelter as outlined in the Abraham Maslow's Theory of Needs. However, the individual must make decisions as to what to eat, wear, where to live, as well as other wants such as where to seek proper health care when taken ill.
ECONOMICS
Etymologically, the term ''ECONOMICS'' originated from two Greek words namely ''Oikos'' and ''Nemein'' which mean ''HOUSE and ''TO MANAGE OR DISTRIBUTE'' respectively. Generally the word ECONOMICS is defined as the allocation of scarce resources to satisfy human wants. Economics is a broad subject so for that matter, there is a lot of definitions.
WEALTH DEFINITION
An enquirer into the Nature and Causes of Wealth of Nations. In the year (1723 to 1976) Adams Smith came about this definition of Economics but you can go ahead and read more about it.
WELFARE DEFINITION
Alfred Marshall (1842 to 1942) wrote a book ''Principles Of Economics'' (1890) in which he defined .economics as '' a study of mankind in the ordinary business of life, it examines that part of individual and social action which is most closely connected with the attainment and with the use of the materials requisites of well - being.
GROWTH DEFINITION
Paul Samuelson defined economics as '' the study of how mean and society choose, with or without the use of money, to employ scarce productive resources which could have alternative uses, to produce various commodities over time, and distribute them for consumption, now and in the future among various people and groups of society.
SCOPE OF ECONOMICS
Scope simply refers to the expanse of the field of study and in discussing the scope of economics, there is the need to indicate whether it is a SCIENCE or an ART and a positive or a normative science. Scope of economics also covers the subject matter of economics.
Economics As A Science: Science is the systematic way of studying phenomena with the view to understanding nature, mainly through observation and systematize body of knowledge that traces and establishes the relationship between cause and effect. With economics as a science, the subject investigates the possibility od deducing generalizations as regards the economic motives of human beings. Basically, economics as a science follows the systematic scientific process which are,
- Identification of the problem
- Assessment of the statement of problem
- Formulation of Hypothesis
- Collection of data regarding the phenomena under study
- Obtaining results through data analysis, drawing conclusions and making generalizations.
- Formulation of theories after repeated testing yields same
- Establishing a law after the theory is tested
Economics As A Art: An art is a system of rules for the attainment of a given end. Science teaches knowledge whiles An art teaches practice. In other words, SCIENCE teaches us to know whiles an ART teaches us to do. Applying this definition, we find that economics offers practical guidance in solving economic problems.
Positive Economics: It describes ''what is'' and simply provides results of economic analysis of problem. Positive economics is therefore based on facts and analyze economic phenomena from an objective or scientific point of view.
Normative Economics: It describes ''what should be'' or ''what ought to be'' and analyze economic phenomena from a subjective and value judgement viewpoint. It's goal is to summarize people's inclinations to various economics developments, situations, and programmes or the desirability of the listed by asking or quoting what should happen or what ought to be.
METHODOLOGY OF ECONOMICS
Economics as a science adopts two methods for the discovery of its laws and principles and they are DEDUCTIVE METHOD and INDUCTIVE METHOD. These methods are two forms of logic and help establish truth.
Deductive method: Deductive infers reasoning from general to particular, that is, it commences with certain principles that are self-evident or based on strict observations. The deductive method derives new conclusions from fundamental assumptions or from truth establishes by other methods. For instance, Ghanaian traders earn profit in their businesses' is a general statement which is accepted even without verifying it with the traders.
Inductive method: This is the process of reasoning from particular to general, that is, it commences with the observation of certain facts and thereafter formulates laws theorems on the basis of observed facts. For example, data on household poverty in Ghana is collected, classified, analyzed and important conclusions are drawn out from the results thereof.
BRANCHES OF ECONOMICS
The study of economics is divided into two main branches. These are MICROECONOMICS and MACROECONOMICS. These were coined by Rangnar Frich (Noble Prize Winner in Economics)
Microeconomics: The word micro comes from the Greek word ''mikros'' which means small, single or a unit. Microeconomics is the branches of economics that studies the economics behavior of the single or individual units within the economy.
Macroeconomics: The word macro also has a root in the Greek word ''makros'' which means big, large and whole. This means that MACROECONOMICS studies the economy as a whole and therefore takes into consideration the aggregate components of that economy. It involves the study of the behavior of board economic aggregates such as aggregate output, aggregate consumption, unemployment, inflation, national income, aggregate demand.
THE TEN BASIC PRINCIPLES OF ECONOMICS OR FUNDAMENTALS OF ECONOMICS THINKING
1. Decisions made by economic agents always involve trade offs and opportunity costs.
2. The true cost of a commodity is what one gives up to acquire that commodity.
3. Economic agents make decisions at the margin.
4. Economic agents always respond to incentives.
5. Everyone is made better off through trade.
6. Markets are efficient coordinating tools for synchronizing economic activities.
7. Government intervention can improve market outcomes.
8. A country's ability to produce commodities determines its standards of living.
9. General price level increases when government prints too much money
10. Society faces a short-run tradeoff between inflation and unemployment.
Guys, please go ahead and read more about descriptive economics, economic theory and Applied economics.
IN SUMMARY
The focus of this article has been to provide an introduction to the study of ECONOMICS. It sets out by outlining the essence of the subject and defining how the word ''ECONOMICS'' emerged. It proceeds to do a brief survey of definitions to underscore the board and expansive nature of the subject and teases out the methodology involved in economic studies. In this article, the reader is also introduced to positive and normative analyze. It must however be noted that aside of these classifications, descriptive economics, economics theory and applied economics are also explained as system of classification in economics
TRY QUESTIONS
1. What is the subject matter of economics? Explain why economics is both a science and a art???
2. Outlines the steps involved in undertaking a scientific study and compare with the study in economics
3. Identify the reasons why economics is sometimes described as an inexact or soft science??
4. Carefully delineate descriptive economics, economic theory and applied economics.
