Basic Economics

The main reason for studying political economy is that it is practical. Everyone makes economic decisions everyday. We all daring the problem of scarcity and, thus, must continue to make choices. Today, people be getting to be more and more concerned about Economics. The watercourse economic situation seems to bear ons everybody in society the bread earner, the laborer, the bank teller, the accountant, the college professor, and level(p) the student.While most of these people have had no actual background in economics, it comes as a change for the students to familiarize himself with what economics is about. He gets to teach howto analyze the theory and to explain why things ar happening in the nation. With todays emphasis on economics it, therefore, give ins to be fit with the knowledge of economic theory. bits prefatory economic practise consists of effort to satisfy compassionate wants with the use of proficients and services. It involved satisfaction. Human wants fr om the choose for survival otherwisewise known as prefatory require (e. g. food, clothing & shelter), to higher needs for a comfortable and more meaningful life. Man is subject to create wants, developed due to the effects of advertising and epideictical effects of consumption. Economics isconcerned with the satisfaction of many of these human wants especially the basic ones. The basic economic resources of a nation consists of land, labor, slap-up and entrepreneurship. The economy should pay the owners of these basic factors of exertion for the use of their resources such as rent for the land, plight or salary for labor, interests for capital and profit for entrepreneurship. The technique of overlapion which shows how resources are used and combined in production, thus, production is described as capital intensive or labor intensive depending on what factor is predominantly used.In effect, the basis activities of man also constitute the basic exchange that take in pop amid the business firm and the consumers. The abode is the basic overpowering unit in the economy. Since human wants are unlimited, it maxims its satisfaction with the befitting allocation or mix of expenditures within the context of budget limitations. The business firm serves as the economys producing unit to satisfy human wants with goods and services. The use of the resources generates income for the resource owners. Most societies aim to use economic-activity as a channel to improve the peoplesstandards of living within the limits of available resources. Hence, a government can restructure the economic body in instal to solve its shortcomings or problems like un date, economic instability that cause highs and lows in production and investment levels, low level of growth and development, inequality income distribution, goal of the type of economic system. The choice of the nations economic system is vital to any country because it trammels the manner in which goods wi ll be god, the quantities of each good that will be enkindled and the distribution of these goods and services.Within the economy, the basic activities of production, consumption, employment and income generation take place through the interrelationship existing between the basic consuming unit, which is the household and the basic producing unit, which is the firm. Business firm provision the household with goods and services in exchange for payments representing consumption expenditures. On the other hand, the business firm has to use economic resources consisting of land, labor, capital and entrepreneur to produce these goods and services. The households provide the firms theses resources inexchange for payments in the forms of rent, interest, wages, salaries and profit. The funds liquify is picture in the money payment by the firm to the household of its money income and by household to the firm for its purchase of goods and services. On the other hand, the good flow is de picted in the flow of economic resources from the household to the firm and in the flow of good and services from the firm to the household. An economic system, in answering the needs of society, has the function of determining what goods and services to produce as healthful as the order of their importance. This willnaturally depend on the needs of the economy as well as its goals and objectives. In addition, the economic system has to perform the task of organizing arable efforts to produce the selected goods and services in the proper quantities. Lastly it must determine how these goods and services should be shared among the members of society(Leftwich). In traditional economic system, production decisions are made according to customs and traditions ( not allowing the producers to adjust to changes primed(p) by the time). This is usually practices in underdeveloped regions and in mountainous areas whereThe tender economics, the answers to the basic economic problems are dic tated by the government through the head of the nation or a group of men designated by the head to make the decisions. This system is socialistic as the government owns and controls the factors of production. The government plans what to produce and how resources should be allocated. The system works under the principle that the interest of society should prevail over that of the individuals. Decision regarding the distribution of goods, lie in the hands of the government and, hence individual preferences are not considered at all.The commercialize system deals with the economic problems by considering consumers choices. Consumers demand in the grocery as reflected in the footings of goods and services. The market harms serve as signals to the producers about what goods to produce and how much of these goods should be produced. The problem of production is therefore, solved by the price mechanism. In an economy where prices are continuously rising, people have of all time wonde red what factors cause prices to fluctuate. The demand and supply are the main forces that cause prices to adjoin or decrease.From our daily experience of buying and selling, we know that higher prices see people to buy less. Therefore, the demand function shows how the quantity demanded on a particular good responds to price change. As price increases, the quantity demanded of the product decreases, but as price decreases, the quantity purchased will instead increase. (If the price is low demand is high while if the price is high demand is low) Individual consumers, business firms and government agencies participate in the market place motivated by the desire to maximize utility (consumers), profits (business firms), orthe oecumenic welfare (Government agencies). People who are willing and able to buy a particular goods at some price become part of the market demand while those willing and able to sell the good demanded by people at some price are part of the market supply. The behavior of all buyers and sellers in a market determines the quality of good and services that is actually exchanged. With todays emphasis on economics it therefore, pays to be equipped with the knowledge of economic system and learn the basic economics. Leftwich, Richard. 1969. An introduction to economic thinking. USA Rhinehart & Winston Inc.