Understanding Economics

13 Aug Economics is a branch of social science that studies the behavior of various economic subjects of economic decisions that made. This science is necessary as a frame of mind to be able to make a choice of various limited resources to meet human needs that unlimited. Scope of Economic Sciences a. Microeconomics is part of economics that addresses the behavior of individuals in making use of various economic units. Here there are companies and households. b. Macroeconomics is the part of economics that explains the behavior of the economy as a whole (economic aggregates) will be linked to income, output, employment, etc.-within the framework or national scale. Division of Economic Sciences (Alferd W. Stonier and Douglas C. Hague) 1. Descriptive economics Here are collected all the important facts about the particular subject (topic), means to describe the data that describes the various phenomena and the fact that to happen. for example: farming systems in Bali, or the cotton industry in India. 2. Economic Theory (theory of economics or economic theory or economic analysis). Here we give a simplified explanation of how an economic system works and the important characteristics of such systems. Economic theory is built on the basis of observation of cause and effect based on the actions and reactions that occur in the economic life of society. 3. Applied Economics Here we try to use the basic framework of general and analysis provided by economic theory to explain the causes and significance of events reported by economic descriptive experts. Economic Methods a. Positive economics Positive economics is the economic approach that studying the various actors and the workings of economic activity, without the use of a subjective view to declare that something is good or bad from an economic standpoint. Positive economics is divided into two, namely descriptive economics and economic theory. b. Normative economics By some experts of this build-called political economy (political economics), one branch of institutional economics. Normative economics is the economic approach in studying economic behavior that occurs, by trying to give good or bad rating based on subjective considerations.

The three main problems in the economy, namely: 1. What kinds of goods and services that will be produced? 2. How to produce goods and services? 3. To whom goods and services produced? Solving Economic Problems: 1. What goods will be produced (What): Determined by the right to vote in the value amount owned by consumer. 2. How goods are produced (How): Determined by competition among producers. 3. For whom the goods are made (For Whom): Determined by the pattern of demand and supply in the market for factors of production.