What is Economics?
Why is it that in some countries there is extreme poverty while other
countries are wealthy? Why is it that some people earn more than
others? What is the effect of economic policies such as changing
income taxes, imposing pollution control mandates, deregulating
industries, or signing free-trade agreements? Why do some firms
have a more efficient work force than others? How does the banking
system work? Economics provides a framework to answer these
and many other questions. Today almost everything, including elections, are
driven by economic events and decisions.
Economics is about trade-offs. Whenever you make a choice, you
sacrifice something; for instance, if you buy a car you will probably
give up a spring break vacation to Cancun. You, and all other
individuals in society, must make decisions on how to make the
best use of your time, money and special talents. Like you, a
society must decide how to manage its scarce resources in a
world of competing wants. In any economic system, people interact
with each other in making economic decisions as they go about
their basic knowledge of how the system works and how resources
are allocated through the price system is essential for intelligent
participation in a society like ours, which relies on a mix of private
enterprise and government to allocate its resources.