Economics is a study to think about "How can people flock together and live happily?"
In a word, Economics is a study to explore happiness of our life.
"Everyone is happy" is to make people sent the optimum quality(happy) of life.
So, what should we do to ensure the best living for all of us？
In economics, we consider mechanism of resource allocation for people to live an optimum quality(happy) of life.
Mechanism society demands is a mechanism of Resource Allocation that people create products (goods and services) and distribute it to people (members of society). This is called economic system.
In economics, we consider a model that society consists of corporate sector and household sector.
Companies hire people from households, make products, and sell them.
On the other hand, households work at a company to earn money, then purchase products.
In economics, consider the place of exchange greatly between the goods market and the labor market.
Goods market is a place where products (goods and services) are exchanged.
Labor market, on the other hand, is a place to exchange labor.
In the market, all participants will make purchase order (demand) and sell order (supply) while looking at the price presented in the market. Then the price moves in a direction to match demand and supply. The mechanism by which this price moves is called the market mechanism.
In this way, the economic system that determines the price to trade goods and services in the market is called the market economy system.
Market economy model is a model to explain the mechanism of market economy. In order to learn economics, it is important to understand this model.
Let's explain the model.
The market economy is made up of a goods market that deals products between companles and households and a labor market that trades labor.
The goods market is the market that trades the final product (where the product is identified as the final product). The labor market is a market that trades labor.
Households will sell labor and buy final products. This is called household behavior. Households act to maximize utility (satisfaction).
On the other hand, companies buy labor and sell final products. This is called corporate behavior. Businesses act to maximize profit.