3. Applied fields of economics

There is a basic theory and facts in economics, in which all economists are interested. However, economics has some main applied fields that deal with specific topics, such as industrial economics, agricultural economics, economics of energy, economics of education, labour economics, etc.

Industrial organization and structure are studied by industrial economics which also analyzes markets for manufactured goods as well as policies of various enterprises. The degree of concentration and barriers against new competitors in the market have already been analyzed by industrial economics for such important branches of economy as mining, gas, and oil industries, etc. The behaviour of firms and companies in an industry is influenced by the structure of the industry. Both profits and losses in any industry are affected by the behaviour of firms and companies engaged in the industry.

The economics of energy is known as another important field of applied economics closely connected with industrial economics. A lot of energy has been used by the modern economy in recent decades. Farms, factories, plants, transportation as well as families have greatly increased the consumption of various sources of energy since new modern equipment and technologies were introduced.

In the past, wood and coal were used as the main sources of energy. Then, these sources were replaced by gas and oil in most industries. However, in the 1970s energy sources became scarce and there was a rise in energy prices. Since that time serious adjustments have been made by industrial economies in order to cope with the energy scarcity.

For the last few decades the problems of energy economic have been discussed by specialists and governments in many countries. Regular meetings are held by the OPEC formed in order to regulate oil prices.

1. What topics do applied fields in economics deal with?

2. What does industrial economics study?

3. What influences profits and losses in any industry?

4. Why is economics of energy closely connected with industrial economics?

5. What were the main sources of energy in the past?

6. Why were adjustments made in most industries in the1970s?

7. How are prices for oil regulated now?

4. Areas of economics

There are three main approaches to economics: microeconomics, macroeconomics, and development economics.

Microeconomics focuses on individual economic units. The economic behaviour of either individual consumers or firms or industries is studied by microeconomics. The distribution of products and income among all these units is also analyzed by microeconomics. In this field of economics individuals are considered both as suppliers of labour and as consumers of goods. Firms are also studied both as suppliers of products and as consumers of labour and capital.

There was a long period in the 19th and early in the 20th centuries when microeconomic questions dominated in economics.

In the 20th century economists' interest in forces that affect income, employment and prices grew. They considered economy in all its relationships.

The term "macroeconomics" was first used in the 1930s. The world depression that began in 1929 required the study of such macroeconomic questions as achievement of full employment and economic growth by means of proper government policies. This area of economics was developed by the British economist John Maynard Keynes.

The third main field of economics, that is, development economics, studies the factors of economic growth and how these factors are used by governments in order to achieve high living standards.

1. What does microeconomics study?

2. Whose economic behaviour is studied by microeconomics?.

3. How are individuals considered by microeconomics?

4. When did microeconomic approach dominate in economics?

5. When did economists' interest in macroeconomics grow?

6. How is economy considered in macroeconomics?

7. What stimulated the development of macroeconomics?

8. What problems were analyzed in the 1930s?

9. What is studied by development economics?