What is economics about?

Economics is as old as human race but as academic discipline it is new. The first major book on ecinomics was Adam Smit The Wealth of Nations that was published in 1776.

Economics is a theory of how the society works. It is difficult to give the exact definition of economics : The great classical economist Alfred Marshall defined economics as " the study of man in the everyday business of life." But this definition is not very clear. The most important category in economics is scarcity. Everything is scarce, not only diamonds or oil but bread and water as well. This is the case because there are not enough resources to satisfy all peoples needs and wants. Whenever one need or want is satisfied there is another one to be satisfied so we can say that needs are endless.

Because of the existing problems, every society has to choose how to make the best use of scarce resources. The great American economist Paul Samuelson said that every economic society has to answer three questions :

WHAT- What goods are to be produced with scarce resources?

HOW- How should we combine resources of labour, land, etc. in order to produce the goods we need.

FROM WHOM - How should the produced good be distributed?