Subject of economic theory and main key words

In your daily life you must have experienced that as a human being you hold many desires and requirements but the means to satisy them are limited. For example, let us assume that you are a student of an undergraduate programme and as you are still studying, you don't have any regular source of income except for the monthly pocket money of Rs. 750 which your parents are giving to you every month. This pocket money is the only monetary source for you to take care of your monthly expenses. Thus, we can say that you have limited monetary resource of Rs. 750 per month to satisfy your various desires and requirements. Let us further assume that your various desires and requirements are follows:

· You want to see the latest movie which has been declared a box office hit

· You want to buy a new car similar to the one which your friend owns and uses

· You want to purchase mobile phone cum tablet which has been recently launched by XYZ company in the market

· You want to eat out with your friends in good restaurant located near your college

· You need to buy certain course books as you semester end examinations are near

· You have to spend on taking print out of the six class assignments which are due for submission to the college by end of this month.

In nutshell, your desires and requirements are many and your means are limited (Rs. 750 that you get every month as pocket money). In such a case, you will have to prioritize your desires and requirements on the basis of their importance and the gains associated with them. In other words, you will be able to satisfy only some of your desires and requirements and not all as you have limited means or resources. Thus in above example you might be position to satisfy only following few desires and requirements:

· Buying course books for the examination preparation

· Paying for taking print out of the six class assignments due for submission

· And either seeing the movie released recently or eating out with your friends.

This action of yours through which you allocated your limited resource (pocket money of Rs. 750 per month) in order to satisfy your various desires and requirements while ensuring maximization of your gain or return is the crux of the subject Economics.

Economics is thus a social science which studies human behaviour when an individual is encountered with unlimited desires but holds limited means to satisfy them. Economics studies that how individuals (i.e; an Individual human being or an individual firm or an Industryetc) optimise their resources to maximize their gains.