What are your reasons for studying Economics?
The need to study economics stems from the basic problem of scarcity and choice. The basic concern of economics is to allocate the scarce resources to the best possible use in the face of unlimited wants. Consequent to the scarce availability of resources, an economy needs to make choice to allocate the scarce resources to the areas with maximum possible and optimum returns.Thus, the study of economics is very important. The following are the reasons that make the study of economics inevitable.
1. To study the Theory of Consumption
The Theory of Consumption deals with the study of the behaviour of the consumers in different types of market. The basic concern of this theory is how a rational consumer makes his/her preferences to get the maximum possible satisfaction in the facet of fixed level of income, given prices of the goods, etc.
2. To study the Theory of Production
The Theory of Production studies the production decisions of the producers in different types of market. The theory investigates how a producer takes production decisions. The theory highlights how a producer combines different inputs (given their prices) in order to minimise the cost of production and to maximise the profits.
3. To study the Theory of Distribution
The study of economics makes us aware about the distribution of national income. In other words, how the income arising from the total production of an economy is distributed in the form of wage, profit, rent and interest to different factor owners (like, labour, entrepreneur, land, capital).
4. To study the basic macroeconomic problems faced by an economy
Economics proves as the most powerful tool to understand and analyse the root cause of basic macroeconomic problems faced by an economy like, poverty, unemployment, income disparity, etc. Economics helps us not only in understanding the interrelationship among these problems (like the relationship between poverty and unemployment) but also to take various corrective measures.