What Is Economics?
The textbook defines economics as the study of how human beings make decisions in the face of scarcity. In explaining to an individual what economics means, they have to understand that human beings have limited resources. As a result, certain measures need to be taken to ensure that the limited resources meet the unending human demands. Therefore, the process of balancing these two aspects involves the economy.
What Is Scarcity?
The textbook defines scarcity as a situation where the demand for commodities, services, and resources outweigh its availability. When explaining to someone else, they must first understand that human needs cannot be satisfied because they are recurrent. Resources are constant, which means that they are subject to depletion. Therefore, this creates leeway for scarcity.
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What Is Microeconomics?
According to the textbook, microeconomics is a branch of economics that deals with the actions of individuals within the economy, including households, businesses, and workers. In simple terms for a layperson, it includes the management of the resources to meet the unlimited needs at the most basic level. It can even happen in the home area.
What Is Macroeconomics?
The textbook says that macroeconomics looks at the economy from a broader point of view. It deals with aspects such as the increase in production, unemployed individuals, government deficits, and the increase in prices. I would use the government to explain it to an individual. The government views the economy in terms of how it influences people at the national level. When the government works to increase the wage bill or lower inflation rates, they are operating at a macro level.
Who Is Adam Smith And What Is He Famous For?
Adam Smith was an author who wrote the book “The Wealth of Nations.” He introduced the idea of the division and specialization of labor. Dividing labor into discrete tasks makes it easier for people to complete. More importantly, it ensures that people specialize and narrow their expertise to a particular field.
