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.
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.
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.