Applied Economics

• Classical Economics

  • Key Thinkers: Adam Smith
  • Main Ideas: Classical economics emphasizes the idea that free markets can regulate themselves. It argues that supply and demand will naturally reach equilibrium and that economies are self-correcting.
• Marxist Economics Key Thinker: Karl Marx Main Ideas: Marxist economics is based on the idea that economic systems evolve through stages of development, driven by class struggles.
• Neoclassical Economics Key Thinkers: William Stanley Jevons, Carl Menger, Léon Walras Main Ideas: Neoclassical economics builds on classical ideas but incorporates a more detailed analysis of supply and demand. It assumes that individuals make rational choices to maximize their utility, and firms maximize profits. Markets are seen as generally efficient, and prices are determined by supply and demand.
• Monetarism

  • Key Thinker: Milton Friedman
  • Main Ideas: Monetarism focuses on the role of government in controlling the amount of money in circulation. Friedman argued that variations in the money supply have major influences on national output in the short run and the price level over longer periods. He believed that controlling inflation was the most important goal of economic policy, which could be achieved by managing the growth of the money supply.
• Keynesian Economics Key Thinker: John Maynard Keynes Main Ideas: Keynesian economics advocates for active government intervention in the economy, especially during recessions. Keynes argued that aggregate demand (the total demand for goods and services within an economy) is the primary driver of economic growth and employment. When demand is low, he believed that government spending and fiscal policy should be used to stimulate the economy.
• The Law of Diminishing Marginal Utility is a fundamental principle in economics that describes how the additional satisfaction (utility) a person gains from consuming an additional unit of a good or service decreases as they consume more of that good or service.
• The Principle of Diminishing Returns, also known as the Law of Diminishing Returns or the Law of Diminishing Marginal Productivity, is an economic concept that describes how, in a production process, adding more of one input (while keeping other inputs constant) will eventually result in smaller and smaller increases in output.
• Economics is the social science that studies how societies allocate limited resources to fulfill their unlimited wants and needs. It is the study of how individuals, businesses, governments, and other entities make decisions regarding the production, distribution, and consumption of goods and services.
• Economic as an Social Science

  It deals with how people behave within their society in terms of resources.
• Factors of Production

  Land

  Labor

  Capital

  Enterpreneurship
• Applied Economic is the study of econmics in the world situation as opposed to the theory of economics.
• Macroecnomics refers the whole aggregate economy
• Microeconomics looks at the economics at the indvidual consumer company level
• We need to study this subject, Because of unlimited wants and needs.