1. Briefly explain the three distinct components of economics.
THREE DISTINCT COMPONENTS OF ECONOMICS
CONSUMPTION - We want to know how the consumerr decides, given his income and many alternative goods to choose from, what to buy when he knows the prices. This is the study of of consumption.
PRODUCTION - We also want to know how the producer, similarly, chooses what to produce for the market when he knows the costs and prices. This is the study of production.
DISTRIBUTION - Finally, we want to know how the national income or the total income arising from what has been produced in the country (called GDP) is distributed through wages (and salaries), profits and interest. This is the study of distribution.
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