Economics is the social science that is concerned with the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek οἰ κονομία (oikonomia, "management of a household, administration") from οἶ κος (oikos, "house") + νόμος (nomos, "custom" or "law"), hence "rules of the house(hold)". Current economic models developed out of the broader field of political economy in the late 19th century, owing to a desire to use an empirical approach more akin to the physical sciences. Economics aims to explain how economies work and how economic agents interact. Economic analysis is applied throughout society, in business, finance and government, but also in crime, education, the family, health, law, politics, religion, social institutions, war, and science. The expanding domain of economics in the social sciences has been described as economic imperialism. Common distinctions are drawn between various dimensions of economics. The primary textbook distinction is between microeconomics, which examines the economic behavior of agents (including individuals and firms consumers and producers), and macroeconomics, addressing issues affecting an entire economy, including unemployment, inflation, economic growth, and monetary and fiscal policy. Other distinctions include: between positive economics (describing "what is") and normative economics (advocating "what ought to be"); between economic theory and applied economics; between mainstream economics (more "orthodox" dealing with the "rationality-individualism-equilibrium nexus") and heterodox economics (more "radical" dealing with the "institutions-history-social structure nexus"); and between rational and behavioral Firstly, here is a rather, frivolous look at 10 reasons to study economics On a more serious note. The importance of economics includes the following: 1. Dealing with a shortage of Raw Materials. Economics provides a mechanism for looking at possible consequences as we run short of raw materials such as gas and oil. 2. How to distribute resources in society. To what extent should we redistribute income in society? Is inequality necessary to create economic incentives or does inequality create more economic problems. 3. The Principle of Opportunity Cost. Politicians win elections by promising more spending and cutting taxes. This is because lower taxes and more spending is what voters want to hear. However, an economist will be aware that everything has an opportunity cost. Spend more on subsidising free university education, and it means higher taxes and lower spending elsewhere. Giving students £4,000 a year to spend at university may be a noble ideal. But, is it the best use of public money? Are there not better uses of money? 4. Social efficiency. The free market leads to countless examples of market failure. I feel one of the best uses of economics is to provide solutions to overcoming market failure. For example, driving into the centre of town creates negative externalities such as pollution and congestion. There is overconsumption. An economist can suggest a tax on driving into towns to internalise the externality. Of course new taxes are not popular, but, it would provide a better solution for society. You may not want to pay £10 a week to drive into a city centre. But, if it saved you 2 hours of sitting in a jam, then maybe you would be quite happy to pay it. 5. Knowledge When You are Unemployed and waiting in the queue for unemployment benefits, as an economist you will know WHY you are unemployed, which is of course a great comfort. What Are the Major Divisions of Economics? Economics is the social science that is concerned with employing society's resources in such a way as to achieve the maximum level of satisfaction of societal needs and wants. Five major divisions in the discipline provide a conceptual framework for studying economic processes and institutions. Identification 1. The five major divisions of economics are consumption, distribution, exchange, production and public finance. Consumption 2. Consumption is the branch of economics that is concerned with spending by households and firms on goods and services. Consumer spending is significant; it makes up two- thirds of the U.S. gross domestic product. Distribution 3. Distribution examines the allocation of the national income among various inputs, or factors of production. Distribution also can refer to the distribution of income among individuals and households. Exchange 4. Exchange refers to the buying and selling of goods and services, either through barter or the medium of money. In most economies, exchange occurs in a market, the medium that brings together consumers and producers. Production 5. Production involves combining inputs or factors, such as land, labor and capital, to produce goods and services. Economists use a production function to study the relationship between inputs and the goods and services produced. Public Finance 6. Governments are active participants in the economy. Public finance is the division of economics that studies taxation and expenditure by governments and the economic effects.