Economic Concepts
Student’s Name
InstitutionEconomic concepts
A) Economics
Economics is always referred to as a social science that focuses on production and consumption of goods where the transfer of wealth to produce and obtain those goods is involved. According to Adam Smith economics, is concerned with making choices about the usage of resources in search of the satisfaction of individuals needs. Scarcity as a problem involved in economics entails making decisions. Therefore, Economics is described as the study of how individuals make choices. To make these choices we use economic models that are based on assumptions. The models are:
a) Macroeconomics
It focuses on analyzing the economic activity of any county in a broader view or international marketplace.
b) Microeconomics
It mainly focuses on the individual actions and industries actions in reference to their choices, for example, the dynamics between buyers and sellers.
Economics is classified into two branches namely;
a) Positive economics – This branch of economics is fact based, and its concern is to give a description and an explanation of an economic phenomenon objectively. It is a branch of economics that is mostly concerned with testing of economic theories. John Keynes described positive economic as the economics of what is.
b) Normative economics- According to John Keynes, it is a branch of economics that expresses how economic goals ought to be. As opposed to positive economics normative economics expresses normative or value judgments on economics opinions. It always gives subjective statements where they are held conditionally for the facts to be given scientifically pure.
B) Scarcity
It is an economic concept that is used to refer to the existence of finite amount of resources, human-made, or naturally existing. Scarcity can be understood in that since people need more wants to satisfy their needs and indeed nature does not provide as much as we…