Students in many learning institutions globally studying economics often find themselves seeking economics questions and answers to satisfy the demands of their course. Economics is the study of scarcity and its implications to people about growth. Students perceive its study as complex.
Economics is divided into two main branches: macroeconomics, which focuses on the whole economy, and microeconomics, which focuses on individual people and businesses. In studying these disciplines, economic questions might arise, and they may need answers too.
This article explores why economics students find themselves in constant search of economics questions and answers, goals of economics, and further explanation about the concept of demand. But, first, let us define some excellent economic questions students may encounter.
What are some excellent economics questions and answers to ask and get answered?
How managerial economics differs from economics. This question highlights the differences between the two main divisions of the economy: the micro-economy. In this context, managerial economics is microeconomic, which refers to both macroeconomics and microeconomics.
In these economics questions and answers, managerial economics involves applying economic principles to problems of a given firm, whereas economics deals with the principles highlighted that microeconomics deals with.
With microeconomics, distribution theories and wages, interests, and profit are widely studied, widening the scope of economics rather than managerial economics, which modifies and enlarges it.
The types of demand and determinants can be best answered from the producer’s and consumer goods perspectives.
Consumer goods are used for final consumption to satisfy the customer’s wants directly. This includes clothes, prepared food, or housing. The difference between consumer goods and capital goods is determined by using rather than the good itself.
Also, the economics questions and answers seek to clarify consumer goods that are further divided into durable and non-durable.
Durable goods and non-durable goods
On-demand analysis, durable goods present hard-to-solve problems as sales of no-durable goods are made to meet the current demand, which depends on current conditions. This leads to segregation of the current market for durable goods that demand replacing old products and expanding the total stock.
Demand analysis of durable goods is more complex due to technological development, making the existing technology outmoded, depreciating capital over time. Also, suppose the demand for consumer goods goes up, there will also be a need to expand the production of capital goods to produce consumer goods.
What questions can Economics Answer when dealing with economics questions and answers?
Economics questions and answers can answer questions surrounding its study areas to solve problems on resource allocation and expenditure.
Economics explains why rural areas have calmer and more friendly people than cities, where you find a group of professionals and people perceived to be complicated.
Economics can also answer how biblical constraints affect the shape of the economy, giving an insight also in economics questions and answers. It also answers what kind of constraints a consumer who follows biblical principles has on his consumption that a non-biblical believing consumer won’t have.
With economics, you can understand why there is an increase in fast-food restaurants in a given community. This question will find answers surrounding income generation and people’s interests in that business environment.
Economics questions and answers seek to explain what will happen if exchange happens within two countries with goods and services in demand. An example is country A that produces fruits and vegetables while country B produces beef. If an exchange occurs within the two countries, no country will gain economically since all factors remain constant.
What are the five basic economic questions?
When studying economics questions and answers, it is vital also to know that economic systems must answer five essential questions that include:
- What will be produced
- How the goods and services will be produced
- Who will benefit from the output
- How the systems will accommodate change and
- How the economic system will promote progress.
These five questions determine how the availability of resources will meet people’s needs in every society. The country may produce shoes or toys, books, or electronics. Unskilled workers or skilled workers might have the goods in a privately owned company or a government-sponsored factory.
Once these goods are made, experts may decide to step in and set regulations on whether the goods should be given to the people for free or charge the goods at a higher rate such that they are made affordable to a few people.
These five fundamental questions under economics questions and answers face the complex reality of resource allocation and scarcity. Resources are required for production inform of labor, technology, and capital.
Who is the father of economics?
Modern economics theory was founded by the Scottish philosopher Adam Smith (1723-1790). Adam Smith wrote five books by 1776 in which the economic ideas had been presented and organized to answer three basic questions about economics and issues surrounding the science of money
What are the four types of economic systems?
Ordinarily, before you know more about economics questions and answers, you should know that economic systems are determined by how scarce resources get distributed within the economy.
There are four different types of economic systems.
Traditional economic system
These are the most traditional and ancient types of economies in the world today. Since this economic system model depends entirely on land, it is most prominent in rural and third-world countries.
Command economic system
This is the most significant part of the economic system and is controlled by central by a central power. An example is the USSR, whereby the central government made decisions. In this model, the government is involved in every economic activity, from planning to redistribution of resources. This economy is the potential to create wealth and reward its people with affordable prices.
The command economy ensures that it is theoretically possible for the government to create enough jobs and provide goods and services at an affordable price. Therefore, the system has its advantages and disadvantages. If this command economic system is executed correctly, the government can mobilize resources on a large scale to create more jobs for almost all citizens. Also, the government can decide to focus on the good of society rather than a single individual.
Despite these advantages, it is pretty hard for central planners to provide for everyone’s needs. This shortcoming forces the government to ration resources since it cannot calculate demand because it sets prices.
Also, there is a lack of innovation since members don’t have to risk; the government forces workers to pursue jobs it deems fit for the population.
Market economic system
In this free market economic system, firms and households act to determine how resources get allocated. The market financial system also dictates what goods get produced and who buys the goods.
There is no government intervention with the market economic system; hence, the government and the market are separated. This financial system prevents the government from being too powerful and keeps its interests aligned with the needs.
Pros of a free-market economy
Businesses only produce profitable goods and services. There is a lot of incentive for entrepreneurship since customers pay the highest price they want to. Since enterprises are competitive within this market economy, there is an efficient use of factors of production.
Also, there is increased efficiency, productivity, and innovation in the free market. An individual owns all resources, and the decision-making is faster. Individuals have an easy time allocating resources rather than waiting for the slow processes in the case of a government-owned.
There is also increased efficiency since there is a limited role of the government in the process and increased competition. The existence of competition would require people to invest more and produce high quality.
Cons of a free-market economy
There are instances of exploitation from monopolies since the market is solely driven by self-interest; hence, economic needs prioritize human social conditions like the provision of health care.
Cases of limited product range since it is individual cases may occur. This hinders the progression of the goods and products within a region.
Mixed economic system
This combination of different economic systems includes a cross between the market and command economies.
What is the primary goal of economics?
The primary goals of economics apart from economics questions and answers knowledge is to provide full employment and stability whereby the economy expands, unemployment falls, and real work is achieved. Still, five conditions need to be met in the mixed economy. The general desire of the society is key to driving the goals of economics in trying to enhance the livelihood of all people involved. Culture and the government pursue common goals using the available resources to realize an effective result.
These goals are divided into macroeconomic and microeconomic. It is set to ensure efficiency and equity. Opportunities present enable more equal distributions of income and wealth. But, efficiency is hindered since the majority of the employed workers are non-skilled. All these goals are widely considered beneficial and worth pursuing by the parties involved. It will help realize better employment, stable prices, and an economy that grows amidst losses. The pursuit of one goal can lead to stagnation of another.
Therefore, the stakeholder must form various limits that they will require to achieve a particular purpose. The policies set to achieve the economic goals are also affected by governance. Fir mixed economy, the governments, directly impact the pursuit of the plans. It makes the discussion turn into policies and the politics of a place. But, the result must be one stable economy that takes all the required goals of society and government. Sometimes ideas used to realize the plans vary from one place to another. There are also situations where trial and error is used.
What are the three economic systems?
A system that involves the production, distribution, and exchange of goods apart from the consumption of goods and services is an economic system. Below are some of the three basic economic systems.
Capitalist system: This is the most dominant economic system today whereby capital is privately owned and distributed.
The capitalist system has the distribution mechanism left to the market to allocate the resources, emphasizing an efficient allocation of resources. With capitalism, the state is expected to have regulatory agencies that will ensure that market corrections are supervised and that the state must step in, in the case of a liquidity crisis.
Communist system: This economic system ensures that the state takes the allocation and production functions and distribution of goods and services by itself. This model provides that capital cannot be privately held and communal, otherwise known as communism.
Socialist and mixed economic systems: In this financial system, the state has control over some areas deemed to be of primary importance, such as national security and the welfare of the citizens. This ensures that the state barres any private participation in sectors such as defence and essential goods and services.
The concept of demand
When it comes to economics questions and answers, demand is one of them, and it refers to the ability of the buyer to pay for a particular product; hence demand can be defined as the quantity of a product that the buyer desires to buy at a given time.
The demand of a product is determined by factors such as the product’s price, change of customer’s preferences, and the customer’s standard of living.
In the market, the demand for a product is governed by the law of demand, which states that the need for the effect decreases with an increase in its prices. Also, this law reciprocates that if the product increases, the costs will shoot down.
The concept of demand theoretically states that demand can be defined as a quantity of a product an individual is willing to purchase at some specific time. According to lead management experts, the demand for anything at a given price is bought per unit of time. The demand of a product is always defined in three key factors that include:
- point of time
- market place.
The principles of cost
This principle is an accounting principle that records assets at their respective cash amount when the asset was acquired. The cost principle helps financial records track the depreciation and growing value of acquired assets.
The principles of cost ensure recording assets in their original price. This is believed that by doing so, businesses can come up with a piece of more reliable information. Among the cost benefits, principles include being more objective, consistent, verifiable, and reliable. The cost principle does not reflect the bonuses of actual financial position.
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