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
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
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.