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Definition of 'Economics'

Economics is the social science that studies the production, distribution, and consumption of goods and services. It is concerned with how economic agents interact with each other and with the environment to create wealth.

Economics is a broad field that encompasses a wide range of topics, including microeconomics, macroeconomics, and international economics. Microeconomics studies the behavior of individual economic agents, such as households and firms. Macroeconomics studies the economy as a whole, including topics such as inflation, unemployment, and economic growth. International economics studies the interactions between economies of different countries.

Economics is a useful tool for understanding how the world works. It can help us to understand how to make better decisions about our personal finances, how to invest our money, and how to make our businesses more successful. It can also help us to understand the challenges facing our society and how to develop policies to address them.

Economics is a complex and ever-changing field. New theories are constantly being developed and tested, and new data is constantly being collected. This makes it difficult to say definitively what economics is and what it is not. However, some common themes that run through all of economics are the study of scarcity, choice, and incentives.

Scarcity is the fundamental problem that all economic systems must deal with. There are never enough resources to satisfy all of our wants and needs. This means that we must make choices about how to allocate our resources.

Choice is the process of deciding how to use our resources. When we make choices, we are faced with a trade-off. We must give up something in order to get something else.

Incentives are the rewards and punishments that motivate us to make certain choices. Incentives can be positive or negative. Positive incentives encourage us to do something, while negative incentives discourage us from doing something.

These three themes—scarcity, choice, and incentives—are at the heart of economics. They are the basic building blocks of the economic way of thinking.

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