What is economics?

Economics is the study of how individuals and society make choices to allocate scarce resources to satisfy unlimited wants and needs.

Economics as a social science:

Economics is considered a social science because it studies human behavior and society.

Needs and wants:

Needs are essentials that a person needs for their survival. For example:

• Clothes

• Food

• Shelter

However; wants on the other hand are things we desire, but we can live without. For example:

• Designer bags

• Sports cars

• Iphone

The origin of the word “economics” comes from the greek word, “Oikonomos”.

Which translates into the meaning of “managing a household”. Managing a household involves making choices to satisfy the needs and wants of its members. Economics is how we allocate our scarce resources, such as money, to meet the seemingly unlimited needs and wants.

The key concepts of economics:

• Scarcity

• Needs and wants

• Allocation

First, lets tackle scarcity.

Scarcity means that resources are limited. And cannot meet all needs and wants. This also refers too the amount of demand, and demand of limited supplies.

Needs - Something you need to live.

Wants - Something you want, but can live without.

Allocation:

Allocation is the process of distributing resources to meet needs and wants.

This is where the concept of choice plays in. Economics involves making choices because of scarce resources. Economics is a part of Social Sciences, as it studies how people behave and how society handles scarcity. This can be tied to Ethics of choices, and Behavioral Economics. Understanding economics helps in making everyday decisions like budgeting, investing and saving.