Economic Thinking Paper
Economics is the study of how individuals in the society choose to use resources. Resources include land, time, buildings and individual talent. Individuals in the society choose how to use the limited resources that are available to increase their lives. The study of economics leads to the attainment of knowledge of how to improve our lives. This study also helps us understand all beings rely on each other. This study also helps us put into practice ways to help improve our status.
Economists have their own way of rating the economy based on their thinking commonly known as ‘economic way of thinking’. Economists tend to review ways in which resources affect the lives of individuals. Economists classify these resources to three factors land, capital and labor. There are other ways of reviewing how economists think. These ways are model-building, scarcity and choice and economic model (Heyne, 1973).
Model building deals with how to provide needs of individuals in a scarcity world. This tends to explain why economists think about using the limited resources available to fulfill the unending needs of individuals. Models are crucial in that they explain the facts that economists claim affect the needs of individuals. Model building takes figures from the limited resources to draw conclusions using diagrams for explanation (Gilbertie, 1991).
Economic model are descriptions that are used to bring out the economic explanation to individuals. There are two sub branches of these models theoretical and empirical. Theoretical tends to explain how to maximize the resources available while empirical comes up with figure from theoretical model. These models teach about the behavior of the economy by use of mathematical equations. These models however, explain different issues. These models include the Marxist model, Keynesian model and the classical models. The Keynesian model explains how without unemployment the market can be in equilibrium. The classical tends to explain how employment and production can be used to can be achieved from profit maximization. These models use variables which explain about the assumptions made by economists (Gilbertie, 1991).
Scarcity means that the resources at our disposal are minimal to satisfy our needs. Scarcity and choices are factors that lead economists to the study of resource. Factors needed to satisfy the needs of individuals are limited thus choices are needed. This leads an individual to making a choice on the price that they are willing to pay for the limited resource. Making choices is a very difficult idea. The resources to satisfy the needs of individuals are minimal thus cannot be used to satisfy the varying needs of individuals. The needs of individuals are very important thus must be satisfied. Individuals have an option of satisfying the important needs. The achievement of these resources involves cost which is incurred by an individual. Choice is an option made between goods which matters most. It involves selecting the basic resources. The study of scarcity leads to the knowledge of economic goods. These goods are the goods which many sacrifices have to be made to acquire them. These goods are known to be limited in supply. Scarcity is an aspect which forces people to make difficult decisions and which can lead individuals to forego something (Heyne, 1973).
In conclusion, economy is one tremendous study that should be understood by all individuals. Economists have a hard time explaining about the economy. The study of economy is a crucial study. Understanding of the economy gives us the knowledge of how to use the limited resources we have. Scarcity is a part of life which has become embedded in peoples’ lives and which will remain forever. Understanding how to make choices between the limited resources available helps in understanding what to forego and what to have.