Why Study Economics? – Importance Of Studying Economic
Economics is a social science that studies how to manage the resources available to satisfy human needs. It analyzes the behavior and actions of humans, that is, it studies how people, companies and governments make decisions related to production, distribution and consumption.
According to Lionel Charles Baron Robbins, popularly called Lord Robbins, Economics is a social science which studies human behaviours as a relationship between ends and scarce means which have alternative uses
Why Do We Study Economics?
The study of economics provides the following benefits:
- It enables the student to understand the complex nature of economic life.
- It provides the student with the basic skills for analysing economic problems, thus preparing him for future employment.
- It helps the student to undemtand and thus appreciate various government policies especially where choices have to be made.
- It helps government promote growth and development and consequently improve the quality of life of its people.
- It provides a useful tool for analysing fascinating socio-political and economic behaviour in any society.
- Economics teaches consumers how to make rational use of scarce resources to satisfy unlimited wants.
- It provides a rational guide to the business firm and the government in the allocation of scarce resources.
- The study of Economic theories and laws like elasticity of demand and supply and the laws of demand and supply enables agents to maximize profits subject to cost minimization.
The study of economics assists individuals to be independent and be practical individuals. This is possible through the application of practical approaches to emerging issues and providing solutions to deny problems.
E.g An educational system will stop admission of students or expansion when Average Variable Cost (AVC) equals Marginal Cost (MC) i.e. AVC = MC because that is the optimum point at which the cost wall be minimum and the output will be maximum.
We also study Economics which is a branch of the social sciences because of the following reasons.
- Human Wants: We study Economics because, it deals with human beings and the satisfaction of their numerous wants with their limited available resources.
- Allocation Of Scarce Resources: As a result of the fact that the resources within the limit of human beings are not in abundance, it becomes necessary for us to study Economics and decide the alternative uses of these scarce resources in order to satisfy our numerous wants.
- Production: We also study Economics because, it deals with the fundamental questions of what, where, for whom and how to produce goods and services in order to satisfy human wants.
- Distribution: After production, Economics goes further to study how the goods and services produced are to be distributed.
- Hoarding: The study of Economics enables us to monitor the nefarious activities of hoarders that disturb the smooth distribution of goods and services and how to counteract them.
- Consumption: The study of Economics enables us to know the pattern of consumption of goods and services in our society.
- Budget: The study of Economics is also important because, the Economists, after studying human beings and the economic activities of the country will be in a better position to estimate a country’s total avenue human wants and projec the total expenditure in a given year.
- To Take Part In Government: The study of Economics prepares us to take active part in the act of governance of our country.
- Logical Thinking: The study of Economics enables us to develop in us an inquisitive, well be anced and highly philosophical and logical thinking mind.
- Economic Analysis: The study of Economics enabtes us to buitd up theories and tools of economlc anatysis.
- Human Behaviour: The study of Economics enables us to understand individual differences and why people behave the way they do in their material pursuit.