What Economics Is

Economics is the study of how people, businesses, and governments make choices about using resources that are limited relative to the wants they are meant to satisfy. At the heart of the subject lies a single, stubborn fact: human wants are effectively unlimited, but the means of satisfying them are not. Economists call this mismatch scarcity, and it is the reason economics exists as a discipline. If everything we desired were freely and infinitely available, there would be no need to choose, no need to trade, and no need to study how choices are made. Because resources are finite, every society must confront the same three basic questions: what to produce, how to produce it, and for whom to produce.

The fundamental economic problem

The fundamental economic problem is that scarce resources