Understanding Economics: Definitions, Principles, Motives, and Economic Activitie

Actually, what is economics? Understanding Economics is a social science that studies about human activities related to the activities of production, distribution, and consumption of goods and services.

There is also a mention that the definition of economics is all that relates to efforts and human power in meeting their needs to reach a level of prosperity.

The term “Economy” comes from the Greek, namely “Oikos” which means family / household, and “Nomos” which means regulation / law. So that the meaning of Economy is literally a household management or household rules.

Then what are the motives in the economy?

What is meant by economic motives is a person’s reason for carrying out economic activities. The following are some of the motives in the economy in general:

  • Motive to fulfill daily needs. This motif is generally carried out by consumers, for example, buying basic human needs (rice, side dishes)
  • Motive for profit. This motive is carried out by the seller, for example selling basic human needs for profit.
  • Motive of appreciation.
  • Motive to get power.
  • Social motives or help.

Also read: Definition of Economics

Understanding Economics According to Experts

In order to better understand what economics is, then we can refer to the opinions of several experts. The following are definitions of economics according to experts:

1. Robbins

According to Robins, the notion of economics is the study of human behavior as the relationship between its objectives is confronted with the availability of resources to achieve its goals.

2. Alfred Marshall

According to Alfred Marshall, the definition of economics is the study of humans as they go about living, moving and thinking in everyday contexts.

3. John Adam Smith

According to Adam Smith , the notion of economics is an investigation of the circumstances and causes of state wealth.

4. John Stuart Mill

According to John Stuart Mill, the notion of economics is the science that is concerned with creating the exchange value of goods and services that can increase the wealth and prosperity of a country.

5. Hermawan Kartajaya

According to Hermawan Kartajaya, economic understanding is a forum where the industrial sector is attached to it.

Also read: Economists

Economic Principles

Economic Principles

In economics there are several principles that underlie it. Referring to the economic understanding above, the following are the economic principles:

1. Principles of Production

Understanding the principle of production in the economy is that the economy has a role in the procurement of products, both goods and services.

The production process requires cost and effort in its implementation. Production activities will open up jobs and produce certain products.

2. Principles of Distribution

Understanding the principle of distribution in the economy is the distribution / distribution of a product to consumers. This distribution activity must be carried out with a good time calculation so that the products that are delivered arrive at the sales location on time.

For example, shipping fruits and vegetables from farmers to sellers in the market. The distribution process is carried out at dawn so that the quality of fruits and vegetables remains good when consumers buy them.

3. Principles of Consumption

Understanding the principle of consumption in the economy is all the activities of using a product that humans do to meet their needs.

For example, a homeowner buys tiles to replace damaged roof tiles. The goal is that the roof of the house does not leak when it rains and feels comfortable.

Also read:

  • Microeconomics
  • Macro economics

Economic Motives

Economic Motives

Economic motives are all things that are an impetus or reason that makes someone to take economic action, both from within themselves and from outside. In general, there are two types of economic motives, namely:

I. Based on provenance

  1. Intrinsic motives, namely the urge from within human beings to carry out economic activities. For example; humans search for food because they feel hungry.
  2. Extrinsic motives, namely encouragement or influence that comes from outside of humans to carry out economic activities. For example; humans want to buy a house because they see someone else buying a house.

II. Based on Economic Considerations

  1. Motive for Survival, which is the urge in humans to maintain their lives so they try to do things. For example; work to get money to buy food.
  2. Motive for Profit, which is human desire to benefit from economic activity. In general, this motif is owned by producers or traders. For example; sell something to others by taking advantage of the sale.
  3. Motive for Awarding, which is the encouragement from within humans to carry out economic activities because they want to get rewards, both because of their expertise and because of the services they provide.

Also read: Economists

Economic activity

Farming is one of the economic activities

Broadly speaking, human economic activity is the activity of production, distribution, and consumption. Following is a brief explanation of each of these activities:

1. Production Activities

The essence of production activities is aimed at producing products, both goods and services. The performers of this production activity are entrepreneurs in various industries, for example agribusiness entrepreneurs, furniture entrepreneurs, consultants, and others.

Goods or services created from production activities will be distributed to consumers to meet their needs. So, the production activities carried out by producers are to meet the needs of consumers.

2. Distribution Activities

The core of distribution activities is to distribute products (goods / services) from a location to the closest location to consumers. The distribution process is very crucial in economic activities because it can realize harmony between the needs and availability of products needed by consumers.

The distribution process is not a single activity, but a combination of various activities. This distribution includes the activities of transportation of goods, packaging, storage, standardization of quality of goods, and others.

In other words, this distribution activity has many interconnected activities. And the final goal is the distribution of goods needed by consumers to arrive at the right time and goods in good condition.

3. Consumption Activities

The essence of consumption activities is the activity of using or using products (goods / services) to meet consumer needs. Examples of consumption activities include:

  • Buy food to be processed into food
  • Buy clothes and pants for everyday wear
  • The use of electric power to power electronic goods.

Also read:  Definition of Economic Growth

That is a brief explanation of the notion of economics, principles, motives, and economic activity in general. Hopefully this article is useful and broadens your horizons.

 

by Abdullah Sam
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