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Economics - a study of how society decides how and for whom to produce good and services[1] By goods it is meant physical commodities such as coal, steel, computers or bananas and by services - activities such as massages, concerts or restaurants.

There are a variety of modern definitions of economics. Some of the differences may reflect evolving views of the subject or different views among economists.

Parkin Powell Matthews claim that economics is a social study science that studies the choices and behaviors that individuals, businesses, governments and entire societies make. This is due to the fact that they cope with the incentives and scarcity that influence and reconcile those choices[2]

On the other hand, John Stuart Mill defines economics as: "the science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object".[3]

Another definition of economics claim that this is a social study of the production, distribution, and consumption of wealth[4]

The division

Economics subject is divided into two main parts:

  • Microeconomics - is the study of choices and behavior that individuals, householders and organizations make. Also, it examines the way these choices interact in markets and influence of governments. Another way to define microeconomics is to say that it examines how entities, forming a market structure, interact within a market to create a market system.

The examples of microeconomics questions are: Why are people buying more computers and vehicles?

  • Macroeconomics - is the study of the performance of the national economy and the global economy. Macroeconomics examines the economy as a whole to explain broad aggregates and their interactions. Such aggregates include: national income and output, the unemployment rate, and price inflation and subaggregates like total consumption and investment spending and their components. Macroeconomic analysis also considers factors affecting the long-term level and growth of national income (e.g. transport, production). Such factors include capital accumulation, technological change and labour force growth.

Economicsrecommended articles
MicroeconomicsGlobal demandClosed economyThorstein VeblenAustrian theory of moneyCentrally planned economyJean Baptiste SayEconomic factorDavid Ricardo


  1. D. Begg, S.Fisher, R. Dornbusch, Economics, McGraw-Hill Book Company 1987, p. 2.
  2. P. P. Matthews. Economics, Addison-Wesley 2008, p. 4-5.
  3. S. J. Mill, On the Definition of Political Economy; and on the Method of Investigation Proper to It, Essay V, in Essays on Some Unsettled Questions of Political Economy.
  4. Greenwald and Associates, The McGraw-Hill Dictionary of Modern Economics, p. 191.

Author: Marta Głogowska