Civics Today Citizenship, Economics, & You
What Is Economics?
Economics is the study of how we use our limited resources to meet our unlimited wants or needs. Because we have an enormous number of wants, both individuals and governments face the fundamental economic problem of scarcity. Because of scarcity we must make choices among alternatives. Society must decide what to produce, how to produce, and for whom to produce. When we exchange one good or service for money we are making a trade-off. Making choices involves more than just money, however. An opportunity cost is what you cannot buy or do when choosing to do one thing rather than another. To make wise choices consumers must understand the type of economy we have, stay informed, and take advantage of incentives.