What is the definition of economics?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are a number of different ways to define economics.  Of course, they are all very similar, but with different exact wordings.  Let us look at two.

The link below says that economics a social science that studies the:

"allocation of limited resources to the production of goods and services used to satisfy consumers’ unlimited wants and needs."

A book I own, (Hall and Lieberman, Economics: Principles and Applications) says that economics “is the study of choice under conditions of scarcity.”  These two definitions are not exactly the same, but they are substantially identical.  Let us see what they have in common.

First, they both say economics is about how we choose to use our resources.  “Choice” and “allocation of limited resources” are essentially the same thing.  When we allocate resources, we are choosing what/who gets which things.  This means that economics is fundamentally the study of choices that people make.

Second, the two definitions both mention scarcity in one way or another.  Scarcity is the condition that exists because people have unlimited wants but only have limited resources to use in trying to fulfill those wants.  Thus, scarcity is mentioned in both definitions.

Economics, then, is the study of the choices that people make as they deal with the fact that they have unlimited wants but only limited resources.

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