What Is Economics?
Economics is the study of how people, businesses and governments make choices about using limited resources to satisfy unlimited wants.
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Economics is the study of how people, businesses and governments make choices about using limited resources to satisfy unlimited wants.
- Scarcity is the basic economic problem
- Choices have opportunity costs
- It has micro and macro branches
🧠 Quick quiz
Three questions. Score 2 or more to complete the topic.
What is What Is Economics??
Within Economics & Civics, which covers money, markets, business, government, law and citizenship: how societies are organised and run, this topic explains What Is Economics?. Economics and civics topics explain how money, markets, laws and government affect people, so each topic here pairs a clear definition with a model.
Check that you can explain What Is Economics? in your own words and give one example from everyday life. If you can do that, you have understood the core idea.
Understanding What Is Economics? helps you read the news critically and weigh up policies, choices and arguments about society.
What Is Economics? in detail
Economics is the study of how people, businesses and governments make choices about using limited resources to satisfy unlimited wants. It asks three basic questions: what to produce, how to produce it and who gets it. Microeconomics looks at individual markets, such as the price of bread, while macroeconomics looks at whole economies, including growth, inflation and unemployment.
Economists build models, test them with data and try to separate positive statements (facts that can be tested) from normative statements (opinions about what should happen). Economics helps explain everyday decisions, such as what to buy or whether to work, and also major issues such as why prices rise, why some countries are richer than others and how to respond to a crisis.
How the interactive helps you understand What Is Economics?
Click a card to flip it and reveal the answer, then move on to the next one.
Before you change anything, predict the result. Then change one value at a time and check whether your prediction was right. This is a quick way to build a correct mental model of What Is Economics?.
Real-life uses and examples
- Relate What Is Economics? to a news story about prices, jobs, elections or government spending.
- Use What Is Economics? to weigh up the pros and costs of a policy or decision.
- Explain What Is Economics? to a classmate using a choice you make yourself, such as spending pocket money.
Common mistakes to avoid
- Giving an opinion without evidence or a clear economic or civic reason.
- Confusing a short-term effect with a long-term one.
- Learning the definition without testing it. Use the quiz and the interactive to check that you can apply the idea.
Frequently asked questions about What Is Economics?
What is What Is Economics??
Economics is the study of how people, businesses and governments make choices about using limited resources to satisfy unlimited wants.
What are the most important points about What Is Economics??
The main points are: Scarcity is the basic economic problem; Choices have opportunity costs; It has micro and macro branches.
Why is What Is Economics? useful?
Understanding What Is Economics? helps you read the news critically and weigh up policies, choices and arguments about society.
How can I practise What Is Economics??
Open the interactive at the top of this page and change the controls one at a time. Predict the result before each change, then take the three-question quiz. A score of two or more marks the topic as complete on this device.
Which topics are related to What Is Economics??
Related topics in Economics & Civics include Factors of Production, Demand, Price Elasticity.