Significance of Economics

  • First and foremost, the most important advantage of economics is helping the society decide and formulate the ways for the optimal allocation of its limited and scarce resources.
  • Economics provides us the mechanism and analytical techniques to optimise the utilisation of the available resources and reduce wastages.
  • Optimum utilisation of the ‘Opportunity cost’ is another principle in which the scarce resources are utilised efficiently after calculating and checking the opportunity cost. Minimising the opportunity cost gives maximum profits. The use of this principle by governments in budget allocations results in better growth rates for a nation.
  • The stability of an economy is a must for any country or society to survive in the long run. The adoption of sound economic practices in a society can only ensure that the economy is stable and growing at the same time.
  • Economics is equally important for the economical growth of individuals. A person may not need the knowledge and understanding of the theoretical side of economics, but he definitely needs to understand the basic economic practices that he must follow to save himself from going broke or bankrupt and to enjoy a healthy and wealthy life. Also, understanding of at least the basic economics helps maximising the profit.
  • Economists can advise governments on how to manage the economy and avoid inflation and unemployment through well devised economic policies.
  • Economists can also be of great help to the society by suggesting certain policies to the governments to overcome the market failures caused due to various factors such as under or over-production.
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