Question

Using your own words, what is your definition of economics? Why is it important to study economics? Economics can also distinguish needs from wants. Think about this…share one thing that you need versus one thing that you want. What is the big difference in the two?

Answer 1

Economics is the study of allocating scarce resources among competing usages in order to maximize one's objectives. Therefore, economics helps us in optimizing usages of resources in a way that we get maximum benefits out of it. Economics helps us in achieving efficiency i.e. deriving maximum benefits from the resources of the society. Therefore, economics helps in maximizing our wellbeing as well as ensuring sustainability through efficiency.

Need refers to the basic necessities for an individual without which he/she cannot survive. For example, food is a need for an individual.

Want is something which one desires to have but does not have the means to have it. For example, a poor man may desire to have a BMW for which he does not have enough money. This is a want.