What is Economics?
Economics is about Decision Making and Choices.
Because economics is about choices, it involves the human behaviour of consumers and producers.
Consumers demand goods and services to satisfy their needs and wants. Producers provide items that consumers will purchase. Producers are motivated to make a profit.
Resources are Scarce
Resources are things that producers use to make goods and services.
In economics, the definition of resources is very broad. Often the value is not easily measured as they can be the land, the climate, workers or roads. Resources are anything that contributes to making a product for a buyer.
Importantly for an economy, resources are limited, but consumer’s needs and wants are unlimited.
This is the concept of scarcity of resources.
This is the economic problem, the foundation of economics.
Economics is about how an economy makes the best use of these limited resources.
Watch the free businesstute.com introductory economics video and take the introductory economics quiz.
Economics is about Human Behaviour
Because economics is about choices, it is also about what motivates and influences consumers and producers.
Low prices motivate consumers and profits motivate producers to supply to the market, where buyers and sellers trade their product.
The law of demand and supply comes from these motivations.
The interaction of this demand and supply becomes the price mechanism.
So economics explains how markets work.
Micro and Macro-economics
In your economics studies you will also learn about microeconomics and macroeconomics.
Micro means small and macro means big. In economics, micro focusses on individuals, businesses and parts of the economy. Macro focusses on the overall economy.
Now to learn more about this, take this Introductory Microeconomics Tutorial Course Introductory Microeconomics Tutorial Course
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