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Economics is social science which is used to study the production, distribution and consumption of goods and services. The main focus of economics is on the behaviour and interaction of the economist. There are two types of economics; The first one is macroeconomics, and the second one is microeconomics.
Example of Economics: Opportunity Cost
Opportunity costs are used to study the profits that a person earns or leaves a business if it selects different options over previous resources. Generally, not all business decisions are taken by checking the availability of resources; Therefore, many opportunity costs are ignored or missed.
Opportunity cost = return of prior option - return of selected option later
Let's say a business is willing to invest its extra money in the stock markets to make an annual return of 20%. But it returns 15% within the same year. In this case, it's 5% (20% - 15%) which has increased by spending in the stock markets. It considers the 5% opportunity cost for the business.
Lack
It is a basic concept of economics that is used to describe the availability of limited resources to meet unlimited needs. For example in many countries technology is still limited but the demand for technology is unlimited. The shortage therefore allows us to use at least the resources to meet high demands.
Demand and Supply
Demand and supply are the key concept of economics. This is known as the pillar of the market economy. Demand refers to the volume of goods and services that customers want to buy at a given price. Supply on the other hand refers to the availability of goods and services to sell at a given price for vendors and suppliers. In most cases when the company wants to increase the demand for its product, they reduce the price of their product, so that the demand for products is high and they meet the demand by proper supply.
Cost and Benefit Analysis
This is the major point for business. Because everyone in the industry wants to earn money. It is based on a comparison between the cost and benefits of various products and services to increase their revenue.
Incentive
This is similar to the extra money that is paid to the employee by the employer to motivate himself to work with greater effort. There are two types of incentives in economics, that is, external incentives and internal incentives. External incentives inspire the person to complete the task. External incentives, on the other hand, are based on money, discounts, rewards and bonus additions.
Analysis
This is the process that is based on certain points i.e. past data observation and hand-in-hand problems. With the help of this technology, we estimate what choices will be made by people in irrational bases and why they will make them.
Abstraction
In the process we break the problem in different parts or compete to find out which factor is affecting it.
Correction
It is simple technology that eliminates the source of bad choices from economics.
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Microeconomics
Macroeconomics
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