Applied Economics Applied Economics Applied Economics Applied Economics Applied Economics, Study notes of Economics

Download Applied Economics Applied Economics Applied Economics Applied Economics Applied Economics and more Study notes Economics in PDF only on Docsity! How Applied Economics Solve Economic Problems Along with the development of the earth is a series of economic problems need to be addressed, but first and foremost we must know the reason behind why these economic problems are existing. There are three major causes, one of it is the unlimited wants. Human wants are unlimited in numbers. There is no end of human wants; whenever one want is satisfied, automatically the other wants crop up and this goes on and on. Second cause is the limited resources. Goods and services that satisfy human wants are produced with the help of resources such as land, labor, capital and enterprise. These resources are scarce while wants are unlimited. Due to scarcity of these resources, an economy cannot produce all that goods and services as required by its citizens. Consequently, some wants remain unsatisfied. The third and last majority cause is alternative uses of resources. Means are not only limited but also have alternative uses. Hence, choice has to be made for different alternative uses. Economy has to solve some basic problems called Central Problems of an economy, which are: what to produce, how to produce, and for whom to produce. The problem ‘what to produce’ can be divided into two related questions. First, which goods are to be produced and which not; and second, in what quantities those goods, which the economy has decided to produce, are to be produced. Because resources are in fact scarce relative to human wants, an economy must choose among different alternative collections of goods and services that it should produce. The problem of ‘how to produce’ means which combination of resources is to be used for the production-of goods and which technology is to be made use of in production. Once the society has decided what goods and services are to be produced and in what quantities, it must then decide how these goods shall be produced. ‘For whom to produce’ all societies need to decide who will benefit from the output from its economic activity, and how much they will get. Applied economics is the application of economic theory to determine the likely outcomes associated with various possible courses of action in the real world. If economics is the science of studying how people use various, limited means available to them to achieve given ends, then applied economics is the tool to help choose the best means to reach those ends. As a result, applied economics can lead to "to do" lists for steps that can be taken to increase the probability of positive outcomes in real-world events.