ECONOMICS

Economics
Economics is a subject matter that relates to management of scarce resources in a manner such that individuals maximise their profit and satisfaction at the level of individual and society maximises its welfare at the level of country as a whole. 
Scarcity
Scarcity is a situation when demand for a good exceeds its supply even at zero price. 
Economic problem
Economic problem is the problem of rational management of resources or the problem of optimum and efficient management of resources. It arise because (1) resources are scarce, and (2) resources have alternative uses. Economic problems are also called problem of choice and problem of allocation of resources. 
Rational management of resources
At individual level, it means that an individual consumer uses his resources (Income or wealth) in a manner that he maximises his satisfaction. At the aggregate level, it means that country uses its resources (national wealth) in a manner that it maximises the rate of GDP growth as well as social welfare. 
Types of Economics
1. Microeconomics
2. Macroeconomics
1.Microeconomics
The branch of economics which studies about individual economic facts is called microeconomics. It is also called "Price theory". Main tools of microeconomics are individual demand and individual supply. Example: - price of good, cost of a commodity,  wage of a labour. 
2.Macroeconomics
The branch of economics which studies about aggregate economic facts is called macroeconomics. It is also called " Income and employment theory".Main tools of macroeconomics are aggregate demand and aggregate supply. 
Example: - National income,  general price level, inflation. 
Economics as a Science
1.Positive economics
2. Normative economics
1.Positive economics
Positive economics deals with economic issues related to past, present or future. It studies what is, what was and what will be? It deals with such economic situations which can be studied by using facts and figures. The statement of positive economics are verifiable for truth. These statements do not reflect any value judgement or opinion of economists. Example: - Population of India is very high. 
2.Normative economics
Normative economics is the economics of 'what should be' and 'what ought to be'. It deals with opinions of the economists related to economic issues and economic problems. The statement of normative economics are not verifiable for truth. Opinions involve value judgement. 
Example: - National income of India should be high. 
Economy
Economy is a system by which people of an area earn their living. 
Types of Economy
1.Market/Free economy
2. Controlled/Centrally planned economy
3. Mixed economy
1.Market/Free economy
These are the economies where the economic activities are controlled by market forces of demand and supply. In these economies,  economic decisions are taken with the motive of profit maximisation. Private sector dominates economic activity in market economy. 
2.Controlled/Centrally planned economy
These are the economies where the economic activities are firmly controlled by the government or central authority. In these economies, economic decisions are taken with the motive of social welfare. Public sector dominates the economic activity in controlled economy. 
3.Mixed economy
These are the economies where the economic activities are governed by the free play of market forces of demand and supply but are regulated by the government. In these economies, economic decisions are taken with the motive of both profit maximisation and social welfare. Both private and public sectors dominate the economic activity. 

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