WHAT IS ECONOMICS?
Studying economics for the first time, it is necessary to know what economics is all about1. Unfortunately, it is not possible to define the subject by a single word. Economics was defined as the study of mankind in the everyday business life. This means that economics deals with production, distribution, exchange and consumption. It answers such questions as: How do we produce all the things we need? How are prices determined? Economics is also concerned with2 unemployment, inflation, international trade, the interaction of business and labour, and the effects of government spending3 and taxes.
Economics does not stop with the description of economic activity because description alone leaves unanswered many important why and how questions.
Economics is a social science like history, geography, politics, psychology and sociology. It is the study of human efforts to satisfy what seems like unlimited and competing wants4 through the careful use of relatively scarce resources. Economists study what is or tends to be and how it came to be. They do not in any way pretend to tell what ought to be. People must make up their own minds5 about that.
Economics is therefore concerned with activities relating to wealth, i. e. production, consumption, exchange and distribution.
For our own purpose, we shall define economics as the study of man in his attempts to gain a living6 by utilizing his limited resources.