Robbins describes the definition as notclassificatoryin pick[ing] out certainkindsof behaviour but ratheranalyticalin focus[ing] attention on a particularaspectof behaviour, the form imposed by the influence of scarcity. [ 20 ]He affirmed that previous economist have usually centered their studies on the analysis of wealth: how wealth is created (production), distributed, and consumed; and how wealth can grow. [ 21 ]But he said that economics can be used to study other things, such as war, that are outside its usual focus. This is because war has as the goal winning it (as a sought afterend), generates both cost and benefits; and,resources(human life and other costs) are used to attain the goal. If the war is not winnable or if the expected costs outweigh the benefits, the decidingactors(assuming they are rational) may never go to war (adecision) but rather explore other alternatives. We cannot define economics as the science that study wealth, war, crime, education, and any other field economic analysis can be applied to; but, as the science that study a particular common aspect of each of those subjects (they all use scarce resources to attain a sought after end). Some subsequent comments criticized the definition as overly broad in failing to limit its subject matter to analysis of markets. From the 1960s, however, such comments abated as the economic theory of maximizing behavior and rational-choicemodeling expanded the domainof the subject to areas previously treated in other fields. [ 22 ]There are other criticisms as well, such as in scarcity not accounting for the macroeconomicsof high unemployment. [ 23 ] Gary Becker, a contributor to the expansion of economics into new areas, describes the approach he favors as combin[ing the] assumptions of maximizing behavior, stable preferences, and market equilibrium, used relentlessly and unflinchingly. [ 24 ]One commentary characterizes the remark as making economics an approach rather than a subject matter but with great specificity as to the choice process and the type of social interactionthat [such] analysis involves. The same source reviews a range of definitions included in principles of economics textbooks and concludes that the lack of agreement need not affect the subject-matter that the texts treat. Among economists more generally, it argues that a particular definition presented may reflect the direction toward which the author believes economics is evolving, or should evolve. [ 25 ] Microeconomics Main article: Microeconomics Markets Main article: Markets Economists study trade, production and consumption decisions, such as those that occur in a traditional marketplace. In Virtual Markets, buyer and seller are not present and trade via intermediates and electronic information. Pictured: São Paulo Stock Exchange, Brazil. Microeconomics examines how entities, forming a market structure, interact within a marketto create a market system. These entities include private and public players with various classifications, typically operating under scarcity of tradeable units and government regulation. The item traded may be a tangible productsuch as apples or a servicesuch as repair services, legal counsel, or entertainment. In theory, in a free marketthe aggregates(sum of) ofquantity demandedby buyers andquantity suppliedby sellers will be equal and reach economic equilibriumover time in reaction to price changes; in practice, various issues may prevent equilibrium, and any equilibrium reached may not necessarily be morally equitable. For example, if the supply of healthcare services is limited by external factors, the equilibrium price may be unaffordable for many who desire it but cannot pay for it. Various market structures exist. In perfectly competitive markets, no participants are large enough to have the market powerto set the price of a homogeneous product. In other words, every participant is a price taker as no participant influences the price of a product. In the real world, markets often experience imperfect competition. Forms include monopoly(in which there is only one seller of a good), duopoly(in which there are only two sellers of a good), oligopoly(in which there are few sellers of a good), monopolistic competition(in which there are many sellers producing highly differentiated goods), monopsony(in which there is only one buyer of a good), and oligopsony(in which there are few buyers of a good). Unlike perfect competition, imperfect competition invariably means market power is unequally distributed. Firms under imperfect competition have the potential to be price makers, which means that, by holding a disproportionately high share of market power, they can influence the prices of their products. Microeconomics studies individual markets by simplifying the economic system by assuming that activity in the market being analysed does not affect other markets. This method of analysis is known as partial- equilibriumanalysis
Posted on: Sat, 18 Oct 2014 13:25:31 +0000
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