学科大讲堂：A glimpse of Economics

Author: Dr.N.Pakshi Rajan, Teacher in economics, Cambridge shishi A-level centre, Chengdu,China.
　　What is economics and what it teaches you?
　　The term economics is derived from the ancient Greek work 'oikonomia'. It means management of a household and administration.
　　The term 'Scarcity' (limited) of resources remains forever in a world so long as human wants are unlimited. As we acknowledge by the fact of this unavoidable phenomenon, alternatively, economics plays a key role in this context. Economics is a social science, and fundamentally concerned with how to allocate those resources most efficiently.
　　Economics teaches you to 'making choices'- how to make well-informed decisions.
　　What are the main branches of Economics?
　　Mainly, two branches of economics: Micro and Macro economics. Micro economics views the behavior of an individual economic agent (producer, consumer, etc) in an economic situation. In economics, economic agent refers to an actor and a decision maker. Up until 1930 (The Great Depression), all economic analysis focused on micro economics.
　　Macro economics is a study of the economy as a whole. The macro economics indicators are inflation, unemployment, balance of payments and economic growth.
　　Why you study Economics?
　　Human life is interesting as it filled with curiosity. Studying Economics satisfies our curiosity; is a fascinating subject either. It teaches you what is happening in the world around you.
　　Generally, brouhaha over studying economics is as it revolves only around wealth creation. Understandably, every economic decision and activity impacts our everyday lives. At a personal level it is important to understand and realize the primary and secondary effects of a change in interest rate, a change in tax structure, level of unemployment, rate of inflation, currency exchange rate fluctuation to name but a few. These changes are inevitable and need to be understood.
　　Economics is an analytical subject. So the ability to think logically and clearly helps you make the right decisions. Over the course of study you acquire skill in different areas- communicating skills, report writing, problem solving skills, team work, time-management and organizational skills, which in turn shape you to fit in this competitive world.
　　No matter what your career aspirations are. Economics degree opens a lot of doors both in private and public sectors in the fields of manufacturing, transport and communications, banking insurance, investment, and trading.
　　What skills will I learn studying Economics?
　　Economics helps develop a number of inter-personal and intra-personal skills:
　　- Communication
　　- questioning
　　- Research
　　- analyse and evaluation
　　- working with groups to discuss economic issues and solve economic problems
　　Noble Prize in Economics:
　　The Nobel Prize is the coveted prize in the field of economics. Every year since 1901 the Nobel Prize has been awarded for achievements in Physics, Chemistry, Physiology or Medicine, Literature and for Peace. Besides, in 1968, Sveriges Riksbank (Sweden's central bank) established the prize in Economics science. The first prize in Economics science was awarded to Ragnar Frisch and Jan Tinbergenin 1969.
　　Where will studying Economics take me?
　　Economics is a versatile subject. This joke gives you a pretty good idea of the versatility of the subject.
　　A mathematician, an accountant and an economist apply for the same job. All 3 got the same questions to answer.
　　The interviewer calls in the mathematician and asks, "What does two plus two equal?"
　　The mathematician replies "Four".
　　Next, the Accountant says, "On average, four - give or take ten percent, but on average, four".
　　Finally, the economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, " What do you want it to equal"?.
　　Jokes apart, studying economics can prepare you to actively take part successfully in the increasingly knowledge-based and interdependent global economy. It makes life interesting as it gives you clear understanding of the objectives, methods and limitations of economic policies.
　　Embracing an economic theory in real life:
　　Let us focus on Utility Theory. Adam smith (Father of economics) wondered why something as necessary to life as water had a lower price than diamonds, something with no "survival" value at all. The fact is, value of a good may fall under two categories either value in use, is what we call utility or value in exchange, is best denoted by price.
　　Take two goods Diamond and Water (Diamond-Water paradox). Goods have both total utility and marginal utility. Water is necessary for life, has a high degree of total utility and marginal utility. Water is necessary for life, has a high degree of total utility. However, since it is plentiful in supply, and we consume it in large quantities, the marginal utility afforded by one more class is fairly low (unless, of course, you got back from jogging). On the other hand, diamonds, which have no real-sustaining qualities, have a fairly low total utility. However, since they are available in very limited supply, and we consume them in small quantities, one more diamond would likely have a high marginal utility. Therefore, it is understood that value in exchange is most often determined by marginal utility, rather than total utility.