Importance of Economics

In the modern era, the importance of economics has been increasing. The modern era is also known as the age of economic development. People from various classes, professions, and businesses living in society follow the rules of economics, whether they want to or not.

The pace of economic development can be achieved only by fully adhering to the principles and rules of economics. Therefore, the importance of economics can be mentioned as follows:

(a) Useful for Producers: Economics is found to be very useful for production. Through economics, producers are informed about how to combine the factors of production (land, capital, labor, and organization) to maximize production at minimum cost. Producers can earn profit by increasing the production of goods that are in high demand.

(b) Useful for Consumers: If consumers have knowledge of the principles of economics, they can make their spending on goods and services economical or less costly. Consumers can obtain satisfaction by managing their limited income according to the law of substitution.

(c) Poverty and Development: It is useful for improving the situation of poverty and unemployment, high population growth, low income, and low production prevalent in less developed countries, and for achieving economic development. These problems can be solved through economics. Therefore, economics is considered useful for poverty reduction and as a source of economic development.

(d) Useful in the Distribution of National Income: Economics clarifies how national income is being distributed among the factors of production (land, labor, capital, and organization). Economic development of a country is not possible by prioritizing only one sector. For this, the country's income must be distributed equally among the factors of production.

(e) Maximum Utilization of Resources: In developing countries, abundant resources are going to waste without being utilized. National income can be increased through the utilization of these resources. Economics teaches why, how, and for whom such resources should be utilized.

(f) Useful for International Trade: Economics is extremely useful for international trade. It helps both importers and exporters to earn profit. It helps traders to easily understand the trade policies of other countries.

(g) To Solve Economic Problems: The rules of economics help countries solve the economic problems they are facing. Developed countries are solving their economic problems by maintaining economic stability, full employment, and controlling price increases.

(h) Importance for Laborers: Economics provides laborers with the knowledge of how to get higher wages from employers. It gives laborers complete knowledge about trade unions, collective bargaining, and working hours. Therefore, economics is an important subject for laborers.

(i) Economic Planning: In the present time, it is not easy to move forward by rejecting economic planning. By utilizing natural resources through economic planning, it becomes easier to make the country prosperous. The importance of economic planning is equally significant for infrastructure development.

(j) Importance for Ordinary People: Even if ordinary citizens have a general understanding of the policies and rules of economics, it is useful for them in terms of market knowledge, price, production, and sales distribution. The government also becomes concerned about ordinary people.