Economics is not philosophy and it is certainly not science. What exactly economics studies is a good question, but there are plenty of academics and professors who provide magnificently turgid explanations of exactly what it might be.
What exactly economics is good for is another good question. The answer may surprise you. It is extremely valuable to professors of economics, authors of books on economics, and those making their incomes promoting some version of economics. Some versions of economics are often useful to those involved in promoting certain government policies or social agendas. The value of economics to almost anyone else who is actually busy with life is not very much.
Economics is much like religion. There are endless varieties, most inventing their own esoteric terms and language, and all requiring a huge amount of credulity or gullibility to embrace. Here are some economic hypotheses (often called "schools of economics"):
[NOTE: Each hypothesis listed is a link but only to verify that each is a genuine economic hypothesis. There is no necessity to examine them, unless you really enjoy having your mind messed with.]
An economist is to economics what a minister, preacher, or priest is to other religions; that is, someone who preaches or teaches and promotes a particular school of economics. Like religious leaders, economists write endless books explaining their particular theology or economic theory. Some economists are like evangelists who make it their purpose in life to convert as many others as they can to their "saving" view of economics and actually have meetings and evangelical campaigns, called seminars and retreats.
Economists and their converts are very militant in their views and it is never a good idea to confront them. If you have doubts about their particular economic sect and its teachings, it is prudent to keep those doubts to yourself in their presence. You will otherwise be subject to their scorn and accused of being a communist, a fascist, anti-progressive, an idiot, or worse.
In spite of the fact that like all religions, all economic theories contradict each other, every economist believes their particular version actually addresses the real world of commerce, such as what is actually going on in business, trade, industry, finance, and markets, just as religionists believe their views of a world surrounded by gods, devils, and angels is a view of the real world.
The Real World vs. Economics
Is there anything true in any of "school of economics?" Actually most schools of economics say some things that are true just as all religions say some things that are true, else they could never be put over. The things that are true are never profound and nothing any clear thinking individuals do not already know.
The following is not an economic hypothesis. It is a list of some concepts often encountered within what is called economics that do have some legitimate meaning. My explanation of the meanings of these terms and their relationships is not meant to be authoritative, but to explicate how these concepts can be understood in as simple terms as possible. One may define these words in any way they please, but I believe my definitions are as close to correct as possible. If you disagree, unlike an economist, I will not accuse you of anything.
1. Market Value is often confused with the general concept of value, which are actually only remotely related.
The term, "value," is actually a term of relationship. Nothing is just good, bad, right, wrong, important or not. There are no intrinsic values.
Something can have a value only in relationship to some objective, purpose, or goal. Since only human beings have objectives, purposes, or goals, values only pertain to individuals and in relationship to there own purposes. When considering any possible value, the question is always, "of value to whom for what?" Anything for which there is no answer to that question has no value.
A thing has positive value if it makes possible or supports or accomplishes the achievement of a specified objective, purpose, or goal, and obviously has a negative value if it inhibits or prevents that achievement. In general the right term for values is, "objective values," because real values are determined objectively by identifying what a thing is valuable for and to whom.
A, "market value," is not a value determined by any particular goal, purpose, or objective of any individual, because, "the market value of anything," refers to what some individual or individuals are willing to trade for a thing. The thing might certainly have an objective value to the individual who purchases it, but an individual's objective evaluation of a thing has nothing to do with its "market value." The term "market value" actually means "price." (See #4.)
2. Everything of market value (products or services) requires human work (rationally guided and intentionally chosen physical or mental effort) to produce. Individual producers are the source of all value, both market value and objective value.
3. The creator of a product or service is a producer. Everything else in the field of commerce depends on producers. Without the producer there is nothing to sell, or buy, or value, or trade, and therefore no business, industry, finance, or markets.
[NOTE: The idea of "consumer" is one of many bad economic concepts. There are only producers which exchange what they have produced for the products of other producers. Those who acquire (consume) what others have produced without producing are parasites or thieves (such as welfare recipients, those granted subsidies, or those "employed" by the government). A producer who acquires what another has produced by trading what he has produced for it is a "purchaser," or, "buyer," not a consumer.]
4. The price (market value) of anything (products or services) is determined by how much wealth, (see #7), others are willing to exchange for it. In market terms, the price of a thing is only the price it actually sells for, not what a seller asks for it or "marks" as its price. The true market price of a thing, then, is its real market value, i.e. what it is actually worth on the market.
[NOTE: In most cases, individuals are interested in the price or market value of products and services before buying or selling, but in fact price and market value are never certain until after the fact. There is always a degree of uncertainty about future price and market value, and a great deal of effort is often expended attempting to limit that uncertainty, which is frequently a mistake.]
5. Money is anything used as a medium of exchange or storage. If it is "real" money its value is determined by the market value of the real goods it represents, (an actual commodity, like gold, silver, oil, etc.). If it is fiat money, (government or agency, e.g. bank, produced), its value is determined by its own market value (usually determined by its estimated utility and stability as a medium of storage and exchange by those who use it).
[NOTE: It is called a "medium" of exchange or storage because it is a generalized/non-specific item of, "trade," which can be used to trade for any other product by anyone. In other words, "money," represents anything (or everything) of value that has been produced and is available in the market, eliminating the need for finding a specific product or service to trade for one's own product or service. The latter practice, trading specific products for other specific products, is called barter.]
[NOTE: Ersatz money, e.g. "bitcoin," is neither real money or fiat money, but most closely resembles fiat money. Ersatz money does not really exist as either actual entities or substances or as legal (government) instruments. Ersatz money only exists as a form of computer code stored in computer memories and has no other existence. The value of ersatz money is determined in the same way as fiat money with the additional aspect of a form of the, "greater-fool theory of value," (See #19.)]
6. Generally, the market value or price of anything decreases in inverse proportion to its availability and increases in direct proportion to the demand for it. Demand only means how much others choose to seek a product or service to purchase. (Other factors can and do interfere with this generality. It is not a law, it is only an observation.)
—Availability is metaphysically-determined by facts—what has actually been produced and exists or what services are actually available.
—Demand is market-determined by individual preferences and individual choices. For example, the market value of fiat money being determined by the estimated utility and stability of it as a medium of exchange. Demand is another factor that can only be determined accurately after the fact. Demand only pertains to actual available products and services.
7. Wealth is anything of value (products or money) accumulated from productive effort, that is, which has been produced, earned, or traded for.
8. Cost of production is the amount of wealth expended to acquire the means of production including raw materials, facilities, tools, machines, parts, power & energy, or others' services. Cost of production also includes the cost of "getting the product to market," which might include storage, marketing (advertising), packaging, and shipping, for example.
[NOTE: "Other's services," misnamed Labor is service sold to a producer. The producer of a service sold to another producer is wrongly called an employee, and the producer who buys the service is wrongly called an employer. Raw materials, facilities, tools, machines, power & energy may be purchased and "employed" (used) in the production of a product, but other human beings are not a form of raw material or machines and can only be dealt with (morally) as other producers from whom their services are purchased (for an agreed price wrongly called "wages"). Every aspect of any economic theory that regards individual human beings as a, "resource," is technically, ethically, and socially wrong; it is essentially a view of human beings as slaves. Terms like, "workforce," are examples.]
9. Gross profit is the total wealth received in exchange for sold products and services. The concept is mostly of value as an accounting term.
10. Net profit is the Gross profit minus the cost of production. It is the real gain in wealth of the producer. This concept is what is usually meant by, "profit."
11. Capital is wealth reserved from net profit for investment in future or expanded production. Capital is the primary means of expanding production. Rarer, but more important, are innovation and invention. (See #13.)
12. The commercial market consists of all the individuals with products or services to sell, and all the individuals choosing to use their wealth to purchase products or services. The actual status of the market is indefinitely complex at any time because what is produced to sell is determined by the individual choices of every producer and what is purchased is determined by the individual choices of every purchaser, and all those choices are determined by the individual preferences of every individual making those transactions.
There are endless other variables that effect the market such as availability of products, how perishable products are, how appealing a particular market is to possible buyers or sellers at any time, and all possible interferences. (See #14.)
All these variables are why almost all market predictions are wrong.
[NOTE: The fact that it is individual preferences and choices that determine both what is produced and what is purchased is sometime wrongly referred to as, "subjective." Most individual choices, in fact, are objective choices based on one's best reason and objective evaluation of facts and principles. Of course not all individual choices are objective which is another reason why economic behavior is always unpredictable.]
13. Innovation and Invention are the least predictable and perhaps the most important aspects of the market. Every new discovery, invention, technological development, or method of production cannot be predicted. Every innovation affects every aspect of the market from the availability of resources (because new products use them or produce them or both) to the value of any products new products replace.
14. Interference in the market produces unpredictability. Interference can be natural (disasters, hurricanes, earthquakes, sun spots, volcanos, diseases, individual deaths, etc.) but the one constant interference is government. Direct government actions (war, taxes, tariffs) but more insidiously, so-called 'regulation,' is unpredictable because all government interference is based on political expediency and is determined by, "force," not objective reason.
15. Banking and Credit were originally ways of storing wealth to be used as capital and credit. A bank's product is service, storing and investing (loaning) depositors wealth and providing ways for depositors to use their wealth (checks, credit cards, etc). (Unfortunately, banking has become one of the most dishonest, corrupt, and regulated of industries.)
[NOTE Credit: Money is a product like any other. It's market value (described above) is very much like any other product. "Credit," is money temporarily sold, (loaned,) to another for a price. That price is sometimes referred to as, "interest." The credit price of money is sometimes referred to as, "interest rate." Both governments and banks interfere disastrously in "interest rates."
A loan is actually a "sale" of money. Money, as a product, has some use to whoever uses it. If I want some money to buy resources for my business and do not have enough capital, and can buy some money for that purpose. The person selling the money wants to make a profit on his product so his price will be the value of his product plus a profit, which he is willing to allow to be paid at a deferred time.
The whole price of the money I purchased is the value of the money itself plus whatever the seller adds as his profit from the sale.
If I sell a product I can only make a net profit if the sale price is greater than the cost of production. If I sell money, I can only make a profit if the sale price is greater than the cost of production, that is, greater than the market value of the money itself.]
16. Individual Beliefs and Preferences are perhaps the most important influence on all matters of commerce, business, and finance. The most important influences are the choices of individual human beings. What they are going to think, embrace, want, like, choose to do, or hate can never be predicted. One man's meat is another man's poison and one man's trash is another man's treasure are not just silly aphorisms.
17. Competition only pertains to producers of similar products or products that might fulfill the same demand in the market. In one sense all products are "competing" with all other products in the market because whatever wealth buyers use to purchase one product or service cannot be used to buy any other. The concept is mostly useful as an observation to buyers. What is already being produced and available on the market does need to be understood by producers in their planning, but it is not a fundamental principle.
18. Investment Is some portion of a producers wealth that is used to support (finance) the continuation or expansion of production, often of some other producers, with the expectation of receiving some portion of the profits of the supported production. The invested wealth is often called capital. (See #11.) The process and methods of investing, such as stocks and bonds, is a complex field requiring real study to understand and use effectively. Much of it is dangerous, but it is fundamentally a sound concept.
19. The greater fool theory of value, is usually associated with "investing" in what are called collectibles like art, antiques, and coins, but pertains to any kind of "investment" (purchase) where an increase in value is based on an expectation that someone else (being a greater fool) will be willing to pay more for the thing invested in than the original investor paid.
20. Nothing lasts forever might not be considered an "economic" concept because it is universal. Nevertheless, it is a concept that is very important in all of commercial markets which most people neglect to their detriment. No job, not product, no process, no method remains for ever. New jobs and methods, new products or market disinterest in old ones, and just the fact that most things wear out and cease to function are perpetual facts of life. Going through life without expecting and preparing for such changes is economically disastrous for most individuals.
21. The future cannot be predicted is closely related to the previous principle. In any field but especially in business and finance the fact that no aspect of the future is certain must always be accounted for.
22. You cannot change others. This fact is ignored by almost every so-called school of economics which are all actually forms of sociology with a purpose of producing what is called a, "prosperous society." Since the nature of a society, any society, is determined entirely by the nature of the individuals that make up that society, any scheme to make a society a particular kind of society necessarily means making each citizen of that society a particular kind of individual. Any such scheme is both immoral and impossible—no one can change others and it would be immoral to do so.
I know I have not addressed many other terms associated with economics such as inflation, monopoly, capitalism, (or any other "-isms" that are supposed to be economic-political systems), saturated markets, macro-economics, micro-economics, balance of trade, praxeology, cartels, depression/recession, entrepreneur, corporations, laissez-faire, monetarism, etc.
One reason I have not tried to address every possible such term is because some are simply made-up to fit someone's own view of economics (e.g. praxeology), or only identify the state of a particular market (e.g. depression/recession) or simply misuse a term like capitalism which is not a political system at all, but only the use of capital (see #11) for investing (see #18).
If I haven't succeeded in boring you with economics yet, you can find many more economics terms here. Please don't ask me about them, I'm not interested.