Economics, as defined by the dictionary, is the science that is concerned with the process or system by which goods and services are produced, sold, and bought. As it is, the general perspective of Economics is that its is the study of the economy involving the analysis of charts and tables, the computation of complicated statistical data, and the examination of events and situations that affect the society as a whole. With all this technicalities, you’ll be surprised at how easy economics can relate to your life. Specifically, you as part of the society and the economy are the main component of economics as you go on about in fulfilling your desires and basic needs in relation to the resources available around. All of these definitions, constitute the important science of economics and understanding the basics of it is an essential tool for understanding not only the market and the economy but your role as well in keeping the world turning as it should.

Before we go into the basic concepts, we must first understand how we are directly affected by Economics in our daily lives. Picture this: everyday you wake up and go on about your life. You wake up, take a shower, try to squeeze in breakfast as you rush past queues upon queues of people that are waiting for their coffee fix in the nearest coffee shop, before arriving to your school or work just in the nick of time before your teacher or boss. You study or work with your classmates or colleagues, sometimes chitchatting about the latest gadget or that delicious food you tasted in that newly opened restaurant across your dorm or condo. Then you go home, endure the traffic, and sit in your favorite spot in the couch where you eat your favorite meal while typing into your laptop your latest blog entry about your exciting life.

The breakfast you made with the ingredients you bought from the grocery, the coffee that was purchased, the gadget that everyone is talking about, the social media entry you made about a certain topic, all of these choices shape the economy. Your desires build demand so that the producers would know what and how much supply they will deliver. The main goal of economics is to understand how the economy works and why some nation are richer than the others given the similarities in their resources. It studies how the allocation of resources affect the wealth of the nation. In all of this, economics keeps in mind the inherent desire of the human for self-preservation and self-interest with which they acquire these desires in the rational sense.

Economics is a social science that studies the people, what their wants and needs are as they fulfill their self-interests. The meaning of Economics may be clearly seen in Alfred Marshall’s definition in his book, The Principle of Economics, ‘Thus it is on one side the study of wealth; and on the other, and more important side, a part of the study of man.’

In the next article, we will be tackling what makes up Economics, what scarcity is, and what the types of economics are.