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Definitions Of Economics
Some version of the traditionaldefinition of economics is found inalmost every introductory economicstextbook:"Economics is the study of how scarceresourcesare most efficientlyallocated among alternative goals."
When an economist refers to "scarceresources," they do not necessarily meansomething rare, like diamonds. Theymean resources that are not available inunlimited quantity at zero cost. Thus,scarce resources include everything wecan think of that might be used inproducing any kind of good or service.Economists often classify resources intothree types: capital, labor, and land.When an economist refers to an"efficient allocation," she means that themix of inputs chosen to produce a given quantity of some good or service is theminimum cost mix of inputs.Finally, "alternative goals" simplymeans that people cannot have unlimitedamounts of goods and services, so wehave to choose among them.Because of this, economics is sometimesdefined as the "study of choice."An excellent definition of economicswas provided by the famous Britisheconomist John Maynard Keynes: "...economics is a way of thinking..."