Ecology Economy | Research Study

Running head: ECOLOGY ECONOMY
ECOLOGY ECONOMY
Name of student:
Name of University:
Author Note:

Economics
Economics is the study of resource allocation across economies with respect to limited
resources and unlimited wants. It is the social science that drives distribution, production and
consumption of goods and services in an economy. Wants are limited and it is important to
allocate resources like land, labor, capital, money, equipment, efficiently such that it satisfies that
wants can be fulfilled. It is used to study the problem of scarcity that arises from limited
resources and unlimited wants, in order to satisfy the basic needs of the society (Mankiw 2016).
It is a vast subject that is adequate to understand the current status of the economy and make new
financial policies that will lead to a better economic performance ad greater well-being.
The study of economics is considered as a social science as it explains how society deals
with the scarcity problems and how goods are allocated across markets and economies. It is
recalled as a science because as experiments are performed to understand its observations and
use it to make goods. Similarly, the performance of economies are denoted by the way market
structures are formed and polices are implemented. These policies will have a huge impact on the
economy as efficient policies will enhance the well-being of the people and any negative effect
will lower the quality and living standard.
Economics helps to study the structure of markets in an economy and implicate ways on
increasing the level of efficiency. It is estimated by several parameters that is effective to
understand how well is the economy doing, which is done by examining the statistics about the
economic state and explain its significance. This can adequately change the value of goods and
services in the economy with respect to additional changes in the market. Accordingly, a range
of polices are adopted to improve the economic conditions of an economy.
Economics is divided into two main categories, microeconomics and macroeconomics.
Microeconomics is described as the branch of economics that is related to the behavior of

individuals and firms and the decisions taken by them to make efficient allocation of resources.
This is studied with respect to demand supply, equilibrium price and quantity, availability of
resources, tastes, consumer behavior and other factors at an individual, group or company level
(Kagel and Roth 2016). On the other hand, macroeconomics studies the issues that affect the
economy as a whole such as price levels, inflation, interest rates, rate of economic growth,
national income, changes in unemployment, Gross Domestic Product (GDP), purchasing power
parity, currency fluctuations, exchange rates and economic development. This branch estimates
the performance of economies on a regional, national and international scale.
Macroeconomic conditions can have a huge impact in the economy that can make
changes in the microeconomic parameters. Change in interest rates and inflation will denote the
demand for goods in the economy. A higher demand raises the aggregate consumption and
expenditure which allows firms to extract enormous profits (Haggard and Kaufman 2018).
Accordingly jobs are created and rate of unemployment goes down in the economy. This raises
the income level, standard of living and a better economic growth. Similarly, currency
devaluation lowers the price of domestic goods and reduces the level of imports.
Economics is based on the theory of comparative advantage such that an individual or
economy will produce that good in greater amount in which they have a comparative advantage
in production. They can produce the good at lower cost that raises demand for the product in
national and global economy and likely goods are traded. This forms the basis of international
trade such that higher level of exports raises the aggregate output or income of the economy. It is
based on a cycle that shows that income flows from households to firms as they buy goods and
then back to household in the form of wages of workers. However, the demand for goods is
dependent on the nature and its supplements or complements.