Briefly explain the three distinct components of economics

Learning Objectives • Define economics. • Explain the concepts of scarcity and opportunity cost and how they relate to the definition of economics. • Understand the three fundamental economic questions: What should be produced? How should goods and services be produced? For whom should goods and services be produced? Scarcity Our resources are limited. At any one time, we have only so much land, so many factories, so much oil, so many people. But our wants, our desires for the things that we can produce with those resources, are unlimited. We would always like more and better housing, more and better education—more and better of practically everything. If our resources were also unlimited, we could say yes to each of our wants—and there would be no economics. Because our resources are limited, we cannot say yes to everything. To say yes to one thing requires that we say no to another. Whether we like it or not, we must make choices. Our unlimited wants are continually colliding with the limits of our resources, forcing us to pick some activities and to reject others. Consider a parcel of land. The parcel presents us with several alternative uses. We could build a house on it. We could put a gas station on it. We could create a small park on it. We could leave the land undeveloped in order to be able to make a decision later as to how it should be used. Suppose we have decided the land should be used for housing. Should it be a large and expensive house or several modest on...

Resources are not only limited, but also have alternative uses. Alternative uses means that they can be put into many uses. For example, land can be used for cultivation. It can be used for constructing a house or a factory. Because resources are scare, we have to choose how the resources are to be used so that we can have the best satisfaction. The demerits of statistics is that it can prove anything. It can prove either side of the problem. Statistics is like a clay which can be moulded in any way so as to establish right or wrong conclusions. For example, if we compare per capita income of India for the last 40 years, we arrive at the conclusions that Indian economy is making progress. But if the same data of per capita income are compared with those of developed countries, we find that India is a backward country. An ordinary person with little knowledge cannot use statistics. Only experienced and skilled persons can make use of statistics. Three distinct components of economics are consumption, production and distribution. (i) Consumption : Using of goods for satisfying human needs is called consumption. (ii) Production : Adding or increasing the utility of a commodity is known as production. (iii) Distribution : It means the distribution of the national income or the total income arising from what has been produced in the country (called GDP). GDP is distributed among the agents (factors) of production in the form of wages/salaries, profits, interests and rents. Reso...

• GDP is the sum of all the final expenses or the total economic output by an economy within a specified accounting period. • It does not include the output of its underground economy. • The BEA uses four major components to calculate U.S. GDP: personal consumption expenditures, business investment, government expenditures and net exports • Consumer spending comprises 70% of GDP. • The retail and service industries are critical components of the U.S. economy. GDP Formula The formula to calculate the components of GDP is Y = C + I + G + NX.  That stands for: GDP = Consumption + Investment + Government + Net Exports, which are imports minus exports. In 2019,  U.S. GDP was 70% personal consumption, 18% business investment, 17% government spending, and negative 5% net exports. Personal consumption expenditures include: • Durable goods—cars, furniture, large appliances • Non-durable goods—clothing, food, fuel • Services—banking, health care, education Goods Goods are tangible objects. They are further sub-divided into two even smaller components. The first is durable goods, such as autos and furniture. These are items that have a useful life of three years or more. The second is non-durable goods, such as fuel, food, and clothing. The retailing industry is a critical component of the economy since it delivers all these goods to the consumer. Services Services are paid aid, help, or information. Most are non-tangible, but the BEA also includes commodities that...

All Subjects • Introduction • • • • • • Demand, Supply, and Elasticity • • • • • GDP, Inflation, and Unemployment • • • • Aggregate Demand and Aggregate Supply • • • • Classical and Keynesian Theories: Output, Employment • • • Money and Banking • • • • • Fiscal and Monetary Policy • • • Theory of the Consumer • • • • • • Theory of the Firm • • • • Perfect Competition • • • • • Monopoly • • • • • • Monopolistic Competition and Oligopoly • • • • • • • • Labor Market • • • • • Capital Market • • • Aggregate Demand (AD) Curve In macroeconomics, the focus is on the demand and supply of all goods and services produced by an economy. Accordingly, the demand for all individual goods and services is also combined and referred to as aggregate demand. The supply of all individual goods and services is also combined and referred to as aggregate supply. Like the demand and supply for individual goods and services, the aggregate demand and aggregate supply for an economy can be represented by a schedule, a curve, or by an algebraic equation The aggregate demand curve represents the total quantity of all goods (and services) demanded by the economy at different price levels. An example of an aggregate demand curve is given in Figure . The vertical axis represents the price level of all final goods and services. The aggregate price level is measured by either the GDP deflator or the CPI. The horizontal axis represents the real quantity of all goods and services purchased as measured by th...

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Economics is a social science which studies economic behaviour of a man. Prof. Robbins has defined Economics, as a science of choice. According to him economics is the science which studies human behavior in relation with unlimited wants of individual and limited or scarce resources. That’s how an individual chooses a combination of goods among different goods to satisfy his wants along with limited amount of money. The three distinct components of economics: (a) Production: It simply means creation of utility. Producer also have limited means while they have a variety of goods and services to choose from. The study of production explains that, as producer, how do they choose such combination, so that their revenue is maximized. (b) Consumption: It is the process of using up utility, value of goods and services for the direct-satisfaction of our wants. Human wants are unlimited and no one can satisfy his all wants fully because resources to satisfy them are limited. The study of consumption explains that as consumer, how people allocate their income on the purchases of different goods and services so that their satisfaction is maximized (c) Distribution: The study of distribution explains the economic principle on the basis of which income is distributed among the various factor of productions, how the national income arising from what has been produced in the country is distributed through wages and salaries, profits and interest. Categories • • (31.9k) • (8.8k) • (764k) ...

Content • • • Economics The above attempts to define the discipline of economics in a brief, concise sentence indicate that the discipline has each particular person and social dimensions. The self-discipline straddles the areas of arts and science, of principle and coverage, and offers a fascinating mechanism for interpreting human behaviour, individually and collectively. Economics is the research of how individuals allocate scarce sources for production, distribution, and consumption, each individually and collectively. If a forecast made by a forecast establishment or an professional is extensively considered as very correct, market individuals would buy or promote based on their forecasts, inflicting a change out there trend and making it inconsistent with the forecast. The Multiple Aspects Of Economic Science Supposedly, a blended system combines the most effective options of market and command methods. However, practically talking, blended economies face the problem of finding the right steadiness between free markets and government management. Classical Political Economy Moreover, a number of chapters have mentioned intimately how business networks mirror integration into regional and global markets and need explanations which prolong beyond standard definitions of nation state boundaries. In this quantity, we have adopted in interdisciplinary method to investigate the number of business networks which are utilized in East Asian capitalisms. 2.In human society, it’...