Human activities related to the production of various items and commerce are considered in economics. Why are you studying this subject?
Everyone has requirements. We require water, food, clean air, and housing to live decent lives. There are, however, other, less critical requirements, which vary by individual. One person dreams of a private car, another wants to travel worldwide, the third likes to go to the theater, and the fourth plays computer games.
Unfortunately, it is impossible to meet everyone’s requirements completely. It’s all about human psychology. Let’s pretend Ivan is a beggar. He’ll only dream about conventional eating after that. But Ivan obtained a good job and no longer must worry about food. However, immediately he will have new needs – he will want to dress in fashionable clothes, buy an apartment, and go to the movies. Suppose further that Ivan’s business began to go so well that he turned out to be the owner of a large company. And again, his needs are increasing – now he wants to have a private jet, a yacht, a palace, and his football club.
Economics is the science that allows a person to make the right choice. So, a person cannot satisfy all his needs. Therefore, he must choose between what he will acquire and refuse. It helps to draw up your budget rationally.
Predicting the future
Knowledge in economics allows not only to allocate resources but also to solve other problems. For example, an apartment is an expensive commodity, and few people can buy it right away. There are two options – save up for a few years for an apartment or buy it right away, but on credit. Which option to choose? It is not enough to know merely mathematics to get the correct answer; you must also be able to anticipate the future. Determine whether the apartment will become less expensive or more expensive in the future and how the conditions of loans from banks will change. Economic knowledge will help to make the correct forecast.
All businesses have costs and revenues. For example, a furniture factory buys wood, fabrics, and equipment, hires workers, and pays for advertising its products. All these activities require spending. Such income is formed from the sale of furniture. The enterprise owners are interested in having as much income as possible and as few expenses as possible. The economy helps them in this, although it is not easy.
It is not enough to know merely mathematics to get the correct answer; you must also be able to anticipate the future. Determine whether the apartment will become less expensive or more expensive in the future.
Raising the price of furniture is the most straightforward approach to increase revenue. However, not everything is clear because rising prices will lead purchasers to purchase furniture from other firms, reducing their ability to sell items. Determining the optimal pricing necessitates sophisticated calculations and lengthy studies.
You can save money by purchasing cheaper materials for furniture production. But this decision also has a downside – the quality of products will decrease, which will not please buyers.
Managers are the ones who run enterprises. They decide how much it costs to make a product, how much it costs to sell, where to get the necessary resources, and who to hire. They need extensive knowledge of economics in their work. Usually, they receive higher economic education.
Politics and economics
The economy relates to politics. During the election debate, some politicians promised to triple salaries, lower taxes, and give everyone free housing. Many such promises are impossible to fulfill because the state is limited resources. A populist politician proposes easy solutions to complex problems. The country will face economic difficulties if populists gain power and begin to deliver on their promises.
Society prefers to be ruled by competent politicians rather than populists. That is why everybody who participates in the election of power should have some idea about the economy. It is precisely those voters who do not know the economy well that believe the populists.
The economy helps a person realize his needs better to keep a personal budget. It is also needed by people who manage enterprises. Finally, knowledge of economics is necessary for all interested in politics and voting in elections.
Of course, to survive, it was essential to be better. So, the study of economics is not just the study of curves and the like. But learn how mental imbalance affects economic decision-making.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.