the basics of economics

Each and every nation’s financial stability mostly stands on the economy. But what is the economy? Why the price of goods are higher compare to past some decades in present time? The answer to all the questions is in a one-word economy.

First, let us take one example for better understanding of the concept.

Let’s assume that your father gives you 5000$ for your monthly expenses. You have to deal with all your needs with this money only. You have many options for your spending. Like rent of your residence, food, travel, and etc. You have many options for it but you won’t be able to fulfill all your needs with this money and now in this situation, the planning of money and needs take place.

Needs	Expense per month
residence	1000$
food	2500$
travel	500$
other	700$
saving	300$

 

Now as per the data from the table, you are not able to fulfill your other needs or any other expensive activities. In that case, you save 300$ every month and spend it on vacations. This called management of money as per needs.

Similarly, this situation is faced by every individual, society, and nation. Because any person can’t have everything at once, and they are forced to make choices. That is why one can use resources to fulfill some of his/her wants and leaving or we can say postpone some wants.  

The reason behind it is that human has unlimited wants with some predefined or limited resources.

And the science behind managing the wants as per the limitations of the resources is economics.

The word Economics has come from the Greek term ‘Oikonomia’ which means ‘household’ in English.

Thus economics is the study of how one works to transform the limited resources into goods and services to satisfy their infinite wants and how he/she distribute these goods and services among their selves.