Definition of Economics
All economic questions arise from scarcity – from the fact that wants
exceed the resources available to satisfy them.
Economics is the social science that studies the choices that people make
as they cope with scarcity.
The subject divides into microeconomics and macroeconomics.
Two Big Economic Questions
Two big questions summarize the scope of economics:
o How do choices end up determining what, how, and for whom
goods an services are produced?
o When do choices made in the pursuit of self-interest also promote
the social interest?
The Economic Way of Thinking
Every choice is a tradeoff – exchanging more of something for less of