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Concepts That Are Important for Every Economics Student to Understand

Economics is a vast subject and includes major concepts that are important for every student to understand in order to get the clarity of the whole subject. Sometimes, students cannot follow a particular topic which makes it difficult for them to grasp a whole chapter. However, if you can master the primary and significant points, then studying this subject would be easy and more interesting for you. You can even apply them to your practical life to get better understanding of it.

 We are providing you a list of concepts that are essential for the study of economics:

 1. Demand and Supply

Demand refers to the quantity of product that a consumer is ready to buy at a given price and income level, keeping all the other factors in mind. Supply refers to the quantity that producers wish to sell at a particular price. When both the involved parties mutually agree at a prevailing price, and quantity of demand is equal to its supply, then the economic relationship between the two factors reaches the equilibrium point.

 2. Cost and Benefit

When you compare the cost involved in a particular investment and benefits derived from it, then it is called cost-benefit analysis. Producers might estimate the production cost of a good and the profit that it may earn, to decide at what scale the production should be done. Also, they may make the comparison between two different investments like machinery, the cost of each and returns that are expected form each, so to make the most profitable decision. Same way, consumers may also analyze the price of the product they buy and the satisfaction that is received from it.

 3. Scarcity

If a product is in high demand because of its alternative and varied use but it is limited, then this situation creates the scarcity of the same. Let us take money, for example; you might have limited funds to fulfil your unlimited wants, so you have to give up the one alternative to buy the more useful commodity. This is also the case with resources that are required for the production of various wants of consumers, but it can be used only for a few purposes. So it also involves the sacrifice that you have to make to achieve the other goal. Scarcity can be due to many reasons like demand-induced in which an article may have huge demand which cannot be met by the company, supply-induced where the supply of stock is low as compared to its demand, and structural when due to your location you dont get access to resources.

 4. Incentive

The motivation that drives you to make your choices and achieve your preferences is called incentives. A company may offer rewards and salary hike to encourage the employees to work harder and give their best to attain the organizational goals. Also, different restaurants and firms offer various discounts, gifts, coupons, to induce their sales. Incentives do not only need to be a positive influence, but they can be negative too like threats, but when we talk about economics we mostly refer to the monetary motivation. So, it is when someone tries to persuade others to make a favorable choice and act in a particular way.

5. Interest rates

When a lender gives money or asset, then the borrower pays the interest for using the same over a period of time. It is usually expressed in percentage of the actual principal borrowed. It can be charged monthly or annually as agreed by both.

These were the key concepts of economics that are very significant for all the students of this department. All of them are directly or indirectly dependent on each other and form the important basis of the subject. This doesnt mean that understanding these topics would be enough, but it would help you majorly to grasp the subject pattern more.

If you are looking to seek help with your pending economic assignment, then Assignment Prime is available to assist you through its online economic assignment help services. You can contact us through emails, calls and live chat.


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