Overview of Economics: Introduction

Introduction

Let's face it: If there's one fundamental principle guiding life on earth, it's scarcity. There simply aren't enough beachfront houses, luxury cars, and seats at the theater for everyone who wants one! And on a more serious note, there's not enough food, clothing, and medical care for everyone who needs it.

The entire discipline of economics—and all economic activity—arises from a scarcity of goods and services in comparison to human wants and needs. If there is not enough of something for everyone who wants or needs it, society faces a serious problem: How do we decide who gets that something and who goes without it?

Throughout history there have always been people who obtained what they wanted or needed by force. The barbarians who sacked Rome practiced this form of “economic activity,” and in modern times it is practiced by armed robbers. But a society worthy of the name requires an orderly system of producing and distributing the necessities and luxuries of life. Such a system is essential to a stable society. Economics is the study of systems of production and distribution—which are called economies—and of their fundamentals, dynamics, and results.

This section introduces the science of economics and examines various ways in which societies organize their economies. It also introduces several important economists and explains their ideas, which lead to major schools of economic thought.