According to the traditional approach, there are unlimited wants and ends of human beings and limited resources to fulfill them. However, we make some efforts and such efforts to fulfill our needs and get maximum satisfaction. The subject matter of economics contains the cycle of wants, efforts, satisfaction
It includes consumption, production, exchange, distribution, and public finance. Their short descriptions are below:-
- Consumption:
Consumption is the process of utilizing goods and services to satisfy human wants. It includes different theories like the law of demand, the law of diminishing marginal utility, etc. It includes different theories like the law of demand, the law of diminishing marginal utility, etc
2. Production:-
Production is the process of transforming inputs or factors of production into goods and services. It includes different theories like the law of variable proportion, the law of returns to scale, etc.
3. Exchange:-
Exchange refers the process of determining the price of goods and services. It includes the study of price determination theories under product market such as monopoly, perfect competition, monopolistic, etc. and a financial system like a money market.
4. Distribution:-
The process of determining the price of the reward of factors of production (land, labor, capital, organization) i.e. rent, wages, interest, profit is distribution. People call it also factor pricing.
5. Public finance:-
It is related to government income and expenditure. It includes the study of government revenue, government expenditure, sources of taxation, fiscal policy, etc.
Reference:-
Principles of Economics of Grade 11 (Revised Edition)
BUDDHA PUBLICATION
We hope it helped you to know a little bit about the subject matter of Economics.
