What Is Economics? | CBSE

What is a Economics?

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Google says - "the branch of knowledge concerned with the production, consumption, and transfer of wealth."

Wikipedia says -"Economics is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work." 

Economics refer to the rationale management of scare resources in such a way so that economic welfare can be maximised. An individual maximises its satisfaction, A producer maximises its profit and Government maximises social welfare.

Economy refers to a system spread over a geographical area, where we study how people are earning their livelihood.

There are three types of economy:

1) Mixed Economy: It refers to such an economy where solution to central problems are found partially by Government and partially by private sector. E.g.: India.

2) Market Economy: It refers to such an economy where solution to central problems are found by market forces of demand and supply. E.g.: USA.

3) Centrally Planned/ Social Economy: It refers to such an economy where solution to central problems are found by Government only. E.g.: North Korea. Social justice is given higher priority than profit maximisation. 

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