What is economics at its core?

Economics is more than just the economy of a country. It is concerned with resource utilisation or

more specifically, how to use resources to their fullest extent by an individual or a nation1. Resources

in economics refer to anything used for producing goods and services, which are scarce or finite and

have to fulfil our limitless wants. This may include natural resources, labour, and capital.

The fundamental arms that form the foundation of economics are demand and supply. Demand is

what and how much a consumer will buy at a specific price, whereas supply is what a producer or

seller is willing to supply at a specific price. These terms' descriptions clearly show the dependency of

demand and supply on price.2 This relation is clearly defined in the ‘Law of Demand’ and ‘ Law of

Supply’. Other factors that may affect the demand, considering the price is constant are the price of

substitute and complementary goods, preferences of consumers, population, consumer income, and

market expectations of consumers. Similarly, factors affecting the supply apart from price, are the cost

of production inputs, prices of other goods, technological changes, taxes and subsidies, presence of

other suppliers and expectations of suppliers.3

The distinction of the application of economics for individuals and firms or the nation forms the basis

of the 2 primary divisions of economics - Microeconomics and Macroeconomics. Microeconomics

studies how people use their resources to choose what is more advantageous and require the least

amount of resources. For example, we always juggle 24 hours of the day. How we should divide our

time is always a challenge. We spend a significant amount of daily time on essential activities like

eating, chores and sleeping. The remaining time should be divided effectively between studies and

recreation. The economic problem here is to decide how much time (resource) we will spend on what

to achieve, with the maximum benefit.4

1
Clifford, Jacob, and Adriene Hill. Intro to Economics: Crash Course Econ #1 [online video] (2015),
<https://www.youtube.com/watch?v=3ez10ADR_gM&list=PL1oDmcs0xTD-dJN1PL2N1urX0EKup
BJCQ> accessed 18th January 2022.
2
Luther David, 'Supply and demand'. [website] (n.d.), NetSuite.
<https://www.netsuite.com/portal/resource/articles/erp/law-of-supply-demand.shtml > accessed 18th
December 2022.
3
Mae, 'Law of Supply and Demand'. [website] (2020),
< https://www.efficy.com/law-of-supply-and-demand/ > accessed 19th December 2022.
4
Musgrave, F., E. Kacapyr and J. Redelsheimer, Barron's Ap Microeconomics/macroeconomics
(n.p.:, Barrons Test Prep 2015).
Microeconomics analyses consumer and supplier behaviour in terms of elasticity which shows the

dependency on various factors like price, income, taxation, cost of production, etc.5 Competition is

another major aspect impacting the firm’s behaviour. They face different types of competitive market

conditions which can be broadly classified into four ranges, starting from perfect competition to

imperfect competition which includes monopolistic, oligopoly and monopoly market.6

Macroeconomics, on a large platform, focuses on how a country manages its resources. Issues like

how much of it is to be allotted for national defence, space research or providing free primary

education form with the basis of macroeconomics.

Other challenging concerns of a nation are its debt, interest rates, overall inflation etc. The nation has

to counter these problems by formulating its Fiscal Policy, which monitors the government's

expenditure and taxation. Macroeconomics also helps keep a check on the economy by analysing its

GDP which is the measure of the performance of the economy. A nation is also responsible for

managing its currency through a well-organised banking structure aided by macroeconomics.7

Economics is a fascinating, engaging and informational subject that provides valuable insights to help

understand the individual and world pattern of resource allocation and helps make better decisions.

5
Clifford Jacob and Hill Adriene, 'Microeconomics intro' [website] (2015),
< https://youtu.be/3midaQqm7NM > accessed 19th December 2022.
6
Mark Blaug, 'Economics | Definition, History, Examples, Types, & Facts' [website] (n.d.),
Britannica, < https://www.britannica.com/topic/economics > accessed 18th December 2022.
7
Clifford David and Hill Adriene, 'Macroeconomics intro'. [website] (2015), Crash Course.
< https://youtu.be/d8uTB5XorBw > accessed 19th December 2022.
Bibliography

➔ Clifford, Jacob, and Adriene Hill, ‘Intro to Economics’: Crash Course Econ #1 [online

video] (2015),

<https://www.youtube.com/watch?v=3ez10ADR_gM&list=PL1oDmcs0xTD-dJN1PL2N1urX

0EKupBJCQ> accessed 18th January 2022.

➔ Clifford Jacob, and Hill Adriene, 'Macroeconomics intro'. [website] (2015), Crash Course.

< https://youtu.be/d8uTB5XorBw > accessed 19th December 2022.

➔ Clifford Jacob, and Hill Adriene, 'Microeconomics intro' [website] (2015),

< https://youtu.be/3midaQqm7NM > accessed 19th December 2022.

➔ Luther David, 'Supply and demand'. [website] (n.d.), NetSuite.

<https://www.netsuite.com/portal/resource/articles/erp/law-of-supply-demand.shtml >

accessed 18th December 2022.

➔ Mae, 'Law of Supply and Demand'. [website] (2020),

< https://www.efficy.com/law-of-supply-and-demand/ > accessed 19th December 2022.

➔ Mark Blaug, 'Economics | Definition, History, Examples, Types, & Facts' [website] (n.d.),

Britannica, < https://www.britannica.com/topic/economics > accessed 18th December 2022.

➔ Musgrave, F., E. Kacapyr and J. Redelsheimer, Barron's Ap Microeconomics/macroeconomics

(n.p.:, Barrons Test Prep 2015).