Economic Way of Thinking

Readers Question: Nice blog…i have a question..how can i outline the major elements of the economic way of thinking?..

Interesting Question. Firstly, Check out this essay: Economics – The Dismal Science.

See also: Difference Between Economists and non Economists

You may also be interested in a book like this – The economic Naturalist

Economics is concerned with the optimal distribution of scarce resources. Therefore economists are concerned with:

  • Market forces – supply and demand. What determines prices?
  • Rational behaviour. Most economic theory starts off with the assumption
  • Opportunity Cost. – What is next best alternative of using those particular goods or buying that item?
  • Efficiency – what is optimal way of producing and distributing goods.
  • Cost Benefit Analysis. – Do the benefits of this project outweight disadvantages. For example, pollution may be bad. But, economists will be concerned at arriving at an optimal level of pollution which takes into account all social benefits and social costs.
  • Evaluating the relative importance of wealth vs inequality. What is best way to increase economic welfare.

Mathematical Models

Where possible, economists will try to model the behaviour. The aim is to find patterns and use this to predict likely outcomes. In the real world, it is often difficult to model behaviour because there are so many different variables.

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6 thoughts on “Economic Way of Thinking

  1. I have one more question regarding economic way of thinking. How can i demonstrate(using examples) the relevance of this way of thinking to the analysis of business problems?. Thank you for your help.

  2. Do your own work. This is an exact question that will be included in the BBA103 economics exam at Macquarie university. This is supposed to be worked on independently.

  3. There is nothing here that doesn’t appear in countless economic textbooks. These kind of suggestions I would be more than happy to give to my own students.

  4. I agree with you ‘tejvan’ that the suggestions here are of a general nature, and whilst I am not accusing ‘Fathimath’ of any form of wrong doing, I understand where ‘Sally’ is coming from. I have seen numerous students ask general questions on forums, in which they continue to drill down on individual components of assessments, only to recite the ‘answers’ in formal submissions, and claim it as their own work. University staff encourage you to undertake research on your assessments, but to simply “copy and paste” other people’s own ideas and suggestions, without reference, is in many cases, a form of plagiarism. By all means, ask questions on public spaces, it is a great way to obtain a better and wide understanding of the topic matter, but avoid using it as a way to get your own work done. In addition, it is often best to indicate that your question is from an assessment task, you never know, your fellow students may be able to offer advice and support.

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