Why is the science of economics concerned with the activity of households and individuals at one end of the scale, and that of multinational corporations and governments at the other?

The word economics originates from the Greek word οικονομία , which at first meant the management of the household. The economy is mainly driven by the forces of demand and supply of goods. The households and the individuals are the cells of the economy system. The significance of the study of households and individuals behavior has great importance as they are the main and the final source of consumption. On the other end of the scale, multinational corporations and governments are the main source of production and supply of goods.

The role of the economic science is to predict behaviors of the two parts of economy and balance the forces of demand and supply in order to maintain a prosperous and well developed economical environment. This balance is known as equilibrium. Tendencies towards disequilibrium have often causes the short term and long term collapse of the economic balance and prosperity. My personal opinion is that the current economic uncertainty has is main cause in the disequilibrium in energy consumption and supply. Governments and economists throughout the globe have failed to predict the current demand for energy, which is mainly caused by the households of the developing nations of Asia. Thus, they failed to develop the proper politics to increase the supply which would meet the demand. This fact causes the raise in fuel prices and decreased the buying power of the households. As a result, we experienced a decrease of demand in other expensive products like real estate properties. This resulted to the reduction of the prices of the properties which acted as a domino effect towards the banking system and caused its collapse. Another example was the disability of the communist states to maintain equilibrium throughout a centralized economy. The weakness of the states to predict the demand and supply of the goods causes long periods of depression to those states and finally resulted to the failure of the applied socialism.

So, the need to study all the entities of the economic system from the individuals to the big multinational corporations and governments is obvious and significant for the economic science, in order to achieve its targets.