Economics

Economics (from the Greek οίκος , 'house', and νομος , 'rule', hence "household management") is a social science that studies the production, distribution, trade and consumption of goods and services. Economics is said to be positive when it tries to objectively predict and explain consequences of choices, given a set of assumptions or a set of observations. The choice of which assumptions to make in building a model as well as which observations to highlight, however, is a normative choice. Economics is also said to be normative when it recommends one choice over another, or when a subjective value judgement is made.

Related Topics:
Greek - Social science - Production - Distribution - Trade - Consumption - Goods - Positive - Assumption - Observation - Normative

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Economics, which focuses on measurable variables, is broadly divided into two main branches: microeconomics, which deals with individual agents, such as households and businesses, and macroeconomics, which considers the economy as a whole, in which case it considers aggregate supply and demand for money, capital and commodities. Aspects receiving particular attention in economics are resource allocation, production, distribution, trade, and competition. Economic logic is increasingly applied to any problem that involves choice under scarcity or determining economic value. Mainstream economics focuses on how prices reflect supply and demand, and uses equations to predict consequences of decisions. The fundamental assumption underlying traditional economic theory is the idea of a utility-maximizing rational actor. Neoclassical economics is fundamentally predicated on this assumption, which is used to derive results concerning the functioning of a price system under decentralized market forces.

Related Topics:
Microeconomics - Macroeconomics - Aggregate supply - Demand - Money - Capital - Commodities - Resource allocation - Competition - Value - Supply and demand

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