What is Economics?
Economics is about how and why we make the choices that we do. It investigates human behaviour and its consequences in a world with finite resources. Families, businesses and society each face the same problems. There is so much we want to do, but not enough time and resources to do everything on the list; so we make choices.
Economics is a way of understanding our society and community and how they interact to form "The Economy". It offers insight into the ways in which businesses are structured and compete, and the ways in which people interact and make decisions.
Economics provides a framework for decision making by considering the criteria we use to meet challenges in terms of costs and benefits and how to measure them. It also addresses how best to design the institutions that make decisions on our behalf and how to ensure that the decisions are 'good' from a social viewpoint.
- What is an economist?
An economist examines the role of markets in making decisions, when and how markets are regulated, and the role of the government. An economist addresses issues such as:
- Will an increase in taxes stimulate the economy?
- Will a fall in the value of a currency cause interest rates to rise?
- What causes inequality in the distribution of wealth?
To answer these macro, or community, questions, the economist has to understand decisions made at the micro, or individual level, including:
- How do people and firms react to economic incentives such as goods and prices, taxes, different legal rules or market structure?
- What does this imply for the wellbeing (welfare) of people?
Microeconomic principles are applied to the analysis of many issues, such as:
- What happens when the sale of certain drugs is made illegal?
- Commercial pressures leading to species extinction
- Power generation and pricing
- The pricing of commercial fishing licenses
- The control of pollution
- Why do concerts become ‘sell-outs’?
- Economic issues
The study of Economics offers an insight into a broad range of issues in Australia and around the world, including:
- A contest with the taxman – the impact of tax rates on tax evasion and wastefully invested resources
- The cost of toilet paper in Zimbabwe
- Managing Eden: using incentive theory for wildlife protection
- Foreign aid: what good is it?
- Micro-credit, fertility decision and women’s empowerment in Bangladesh
- Regulating a fishery when prices are uncertain
- Resource abundance, poverty and development
- Are we really making best use of our water?
- Environmentalism, democracy, and pollution control
- Creating markets for greenhouse gas emissions
- What drives productivity growth in Australia?
- Can we explain the cycles in our economy and in the world?
- Will the China boom continue? What does it mean for Australia?
- How can we reduce the number of people living in poverty around the world?
- How can we make our welfare system more effective?
- Our population is ageing – what challenges will that create?
- How should responsibilities be divided between state and federal governments?