Economy: definition and subject matter

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:48

The concept of "economics" was introduced by Aristotle in the 3rd century BC, but the formation of economics as a science took place only in the 12th-13th centuries, simultaneously with the emergence of capitalism.

Economics, defined by many scientists, eventually became one of the main sciences. Almost everyone faces it, because few people have never been to shops and markets. So this complex and multifaceted science - economics - entered the everyday world imperceptibly.

The definition that is used most often in reference books is as follows: it is the science of economic and production activities and the movement of its results between economic entities. The sphere of interests of the economy is large: trends in prices, the labor market, regulation by the state, cash flows, the 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, etc.

The economy, the definition of which is given above, is divided by most economists into two large components: micro- and macroeconomics. As you might guess, microeconomics studies economic processes to the scale of the intersectoral level, and macroeconomics - at the country level.

The main task of economics is to determine how best to satisfy unlimited needs in the face of limited resources. History knows many methods proposed by eminent scientists aimed at solving this problem.

Often there are 3 ways of doing business at the country level: command and control, mixed and, finally, market economy. Determining which method is used in a particular country is not so difficult. The command economy is often used in totalitarian states, when the government clearly regulates and controls distributions

e resources: goods, services, labor, and sets rigid prices. More often than not, this method is ineffective. The market economy, on the contrary, operates completely freely, the state only observes and regulates a littledistortions that occur. Mixed economy combines 2 previous methods with varying degrees of efficiency.

Equilibrium prices in a market economy are determined automatically, based on supply and demand, and prices are also affected by competition. Since consumers are driven by the desire to buy a high quality product at the lowest possible price, and sellers want to sell the product at the highest price, in the end, the price is set at an average level that satisfies both sellers and buyers. The market economy is self-regulating, therefore it is considered the most efficient way of doing business and is the most widespread in the world.