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ec·o·nom·ics

Economics can be defined in a few different ways. It’s the study of scarcity, the study of how people use resources and respond to incentives, or the study of decision-making. Economics is the study of how people allocate scarce resources for production, distribution, and consumption, both individually and collectively. Economics is a broad discipline that helps us understand historical trends, interpret today’s headlines, and make predictions about the coming years.

Economics affects everyone’s lives. Learning about economic concepts can help you to understand the news, make financial decisions, shape public policy, and see the world in a new way.

The study of individual decisions is called microeconomics. The study of the economy as a whole is called macroeconomics. A microeconomist might focus on families’ medical debt, whereas a macroeconomist might focus on sovereign debt.

Economics intersects many disciplines. Its applications include health, gender, the environment, education, and immigration. the forces that underpin the study of economics impact every moment of our lives. At the most basic level, economics attempts to explain how and why we make the purchasing choices we do.

Four key economic concepts—scarcity, supply and demand, costs and benefits, and incentives—can help explain many decisions that humans make.

Four Key Economic Concepts

Water

Scarcity

Scarcity explains the basic economic problem that the world has limited—or scarce—resources to meet seemingly unlimited wants. This reality forces people to make decisions about how to allocate resources in the most efficient way possible so that as many of their highest priorities as possible are met.

Grocery Shopping

Supply and Demand

Supply and demand, in economics, relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. It is the main model of price determination used in economic theory.

Diamond Necklace

Costs and Benefits

Cost-benefit analysis and benefit-cost analysis refer to the same thing–weighing the pros and cons so you can make a decision. Economists absolutely recognize that not all benefits or costs can be measured monetarily. 

Red Carpet

Everything Is in the Incentives

Economic incentives explain how the operation of supply and demand encourage producers to supply the goods that consumers want, and consumers to conserve on scarce resources. Economic incentives are financial motivations for people to take certain actions.

Ten Principles of Economics

Economic conditions are constantly changing, and each generation looks at its own problems in its own way.  The economic principle encompasses a wide variety of economic laws and theories that define or explain how an economy attempts to satisfy the unlimited demand in the marketplace with a finite supply of resources available to do so.

A UNIVERSAL APPROACH

to a

BALANCED AND DIVERSIFIED ECONOMY

Economic diversification is the process of shifting an economy away from a single income source toward multiple sources from a growing range of sectors and markets. Traditionally, it has been applied as a strategy to encourage positive economic growth and development.

Stay in the Know

The Undercover Economist is written by Financial Times columnist Tim Harford, and 'reveals the economic ideas behind everyday experiences'. Harford has written an eponymous book and has spoken at TED and the Sydney Opera House. He is also a broadcaster and formerly worked for Shell and the World Bank. He was made an OBE in 2019 'for services to improving economic understanding'.

The Library of Economics and Liberty, or Econlib for short, is simultaneously a blog, a podcast, and a place for students and researchers to learn more about specific aspects of economics. Alongside its regular articles and essays, it sells editions of economic classics, posts videos of economists, has lists and definitions of economics terms, and provides suggestions for further reading.

Real Time Economics is the Wall Street Journal's dedicated economics section, which functions much like a blog. It provides news, commentary and analysis of both U.S. and world economics.

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