Economics: definition and subject of study

The concept of "economics" was introduced by Aristotle in the third century BC, but the emergence of the economy as a science occurred only in the XII-XIII centuries, simultaneously with the emergence of capitalism.

The economy, the definition of which was given by manyscientists, eventually became one of the basic sciences. Everyone encounters it, because very few people have ever visited stores and markets. So this intricate and multifaceted science - the economy - has entered the everyday world unnoticed.

market economy definitionThe definition used in reference booksmost often, it sounds like this: it is the science of economic and production activity and the movement of its results among economic agents. The sphere of economic interests is great: trends in prices, labor market, regulation by the state, cash flows, utility of goods and services, competition and competitiveness, commodity-money relations, satisfaction of needs, etc. In addition, one of the important parts of the study of economic theory is the world economy.

The definition of the world economy is as followsway: the totality of the national economies of the countries of the world and the relations between them. Thus, the world economy also includes international trade, and the exchange of resources, as well as other economic relations that arise between countries: economic and customs unions, international labor migration, and so on.

The economy, as defined above,most economists are divided into two major components: micro- and macroeconomics. As it is easy to guess, microeconomics studies economic processes to the scales of interbranch level, and macroeconomics - at the level of countries.

economics definitionThe main task of the economy is to defineways to most effectively meet unlimited needs in resource-limited settings. The history knows many methods offered by eminent scientists, aimed at solving this problem.

Often there are 3 ways to managelevel of the country: command-administrative, mixed and, finally, market economy. Determining which method is used in a particular country is not so difficult. The command and administrative economy is often used in totalitarian states, when the government clearly regulates and controls the distributionworld economy definitionth resources: goods, services, labor, and also sets strict prices. Most often this method is ineffective. Market economy, on the contrary, operates completely freely, the state only observes and slightly regulates the emerging distortions. With a different degree of efficiency combines the two previous mixed-economy methods.

Determination of equilibrium prices in a market economyoccurs automatically, based on supply and demand, and competition influences prices as well. Since consumers are driven by the desire to buy high quality goods at the lowest possible price, and sellers want to sell goods at the highest price, in the end, the price is set at an average level, satisfying both sellers and buyers. The market economy is self-regulating, therefore it is considered to be the most efficient way of doing business and has become the most widespread in the world.

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