What Is Economics?

What is economics and why is it important? What two words come to mind when you think about economics? If you said money and goods that's a start. But there's more to it than that, economics is the study of how people make decisions based on the alternatives and resources available to them. Should you go to the movies or study for the exam? Start your own company, or get a job? Or if you are an elected official do you prioritize funding for law enforcement or for education? Every time you turn on a light, grab a snack, or look at a screen you are deciding that the benefit outweighs the cost of that choice. The cost may be your time, attention, money, or something else like your impact on others. The cost of doing one thing is not doing the next best alternative. What economists call opportunity cost. You would like a new bike but then you won't have enough money for concert tickets. The opportunity cost for going to the concert is not getting that new bike. The list of things we want is practically limitless, but resources are not, so how do we make the best decisions based on the choices available to us? There aren't enough resources to satisfy all our wants. A condition called scarcity, we each have to deal with scarcity in one way or another and economists want to understand how we do it. Understanding behavior in the face of scarcity can be a powerful tool for predicting what consumers or businesses will do at a micro scale. Or what entire economic systems will do at a macro scale and that has impacts for governmental policy, voting, and solving lots of problems in our society. Economic thinking is a way of studying how the world works by comparing the cost of an action with the benefit it produces. And thinking like an economist can make confusing or difficult decisions a lot easier.