Economics can be defined as a science that studies human behavior as a relationship that has alternative uses between given ends and scarce means. Economics is concerned with the minimal distribution of resources. It also involves understanding the happenings in the market. Economics examines statistics on the state of the economy and states the importance and lastly, evaluates different policies and their possible outcome.
Economics plays a key role in today’s society. It provides a mechanism of possible outcomes in dealing with a shortage of raw materials. It provides a formula of how to distribute resources in the society. Equal distribution of the resources results in redistribution of income in the society, and hence Inequality can be avoided since most times it has led to unnecessary economic and social problems. Economics helps the government to know to what extent it can intervene in the economy. Sometimes the government will allow free markets but it can always intervene to overcome inequality or under-provision of public goods. It provides solutions to social efficiency and to overcome market failures. Increases in tax can result in a better solution to society. Economics gives knowledge and understanding to people to be in a position to understand what is happening in the economy and give reasons on some of the issues such as unemployment, poverty, and low economic growth in the society. Economics forecast is always not reliable but economists use this method to help the decision-makers have an idea of the possible outcome. It helps in dealing with an economic crisis. With the help of the economist, the government can come up with a strategy of dealing with the persistent recession such as unemployment. It helps in learning economic behavior.
Finally, economics explains why certain people have particular behavior and why they make certain decisions.