Why Study Economics?

It is useful to study economics for the following reasons

  1. Economics provides the underlying principles of optimal resource allocation and thus enables individuals and firms to make economically rational decisions. Thus for example the preparation of budgets involves knowledge of demand and elasticity analysis. The making of price policy decisions draws heavily on the concept of elasticity in economics. Additionally, the theory of production in economics is concerned with the principles that facilitate the optical combination factors of production.
  2. A study of economics enables individuals and organizations to appreciate the constraints imposed the economic environment within which any entity operates. Thus an individual or firm is more fully enabled to appreciate the implications of the annual budget considering how for example the increased liberation of the economy will affect a particular business entity and the economy in general. Additionally, the student of economics is able to appreciate the effects of such economic variables as inflation, exchange rates, interest rates money supply and so on.
  3. The area of development economics is fundamentally concerned with the reasons why societies develop and means of accelerating development. It is vital for individuals as citizens to appreciate the parameters that determine the process so that they contribute more fully to facilitate and contribute to solving the economic problems that characterize their society.
  4. Economics is an analytical subject and its study can help develop logical reasoning which is never superfluous.
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