Economics - Definition

Economics is the social science studying production and consumption through measurable variables. It involves analysing the production, distribution, trade and consumption of goods and services.

Economics is said to be positive when it attempts to explain the consequences of different choices given a set of assumptions and normative when it prescribes that a certain action should be taken.

The subject 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 (including inflation, unemployment, industrial production, and the role of government). Aspects receiving particular attention in economics are resource allocation, production, distribution, trade, and competition. Economics may in principle be, and increasingly is, applied to any problem that involves choice under scarcity or determining economic value.

Areas of study in economics

Economics is usually divided into two main branches:

Microeconomics, which examines the economic behaviour of individual actors such as businesses, households, and individuals, with a view to understand decision making in the face of scarcity and the allocation consequences of these decisions.
Macroeconomics, which examines an economy as a whole with a view to understanding the interaction between economic aggregates such as national income, employment and inflation. Note that this is different from general equilibrium theory, which deals with aggregate problems from a strictly constructed microeconomic viewpoint.

Economics can also be divided into numerous subdisciplines that do not always fit neatly into the macro-micro categorization. These subdisciplines include: international economics, labour economics, welfare economics, neuroeconomics, information economics, resource economics, environmental economics, managerial economics, financial economics, urban economics, development economics, and economic geography.

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