Economics Defined

Economics is the study of how individuals, businesses, governments and societies as a whole, employ resources to satisfy competing wants and needs, in light of scarcity. If ever you believed that the earth’s abundance of resources was limitless, please negate that thought. It is anything but. Yet, in spite of this shortage, it is the aim of individuals, businesses, governments and societies alike, to attain wealth. This creation of wealth is facilitated via the efficient allocation of scarce resources such as: land, labour and capital. Thus, Economics is also defined as the creation of wealth out of scarce resources.

 

Economics is also concerned with the production and distribution of goods and services, and as such, delves into matters like: what goods/services should be produced and in what quantity they should be produced; what means of production should be used; what are the materials or inputs used for production; and, how is the total output or income distributed.

The behaviour and interactions of individuals, governments and societies is of paramount interest as well. How do individuals react to an increase in the price of burgers? How do individuals and firms interact in a market? What effects do monetary and fiscal policies have in an economy?

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