Economics
Economics is the social science studying the production, distribution and consumption of goods and services. It describes them in terms of the tradeoffs between competing alternatives as observed through measurable quantities such as input, price and output.
Economists study human behavior and welfare as a relationship between scarce means (which have other uses) and socially required ends. (Lionel Robbins, 1935) The field comprises a number of (potentially irreconcilable) theories about systems of production and distribution. Aspects receiving particular attention in economics are resource allocation, production, distribution or trade, and competition.
in Chichicastenango, Guatemala.]]Understanding choices by individuals and groups is central. With scarcity, choosing one alternative implies forgoing another alternative (the opportunity cost). For instance, learning one skill implies time not spent learning another. In a market setting, the currently dominant theory is that scarcity is quantified by price relationships.
Economists believe that incentives and desires play an important role in shaping decision making. Concepts from the Utilitarian school of philosophy are used as analytical concepts within economics, though economists appreciate that society may not adopt utilitarian objectives. One example of this is the idea of a utility function, which is assumed to be the means by which individual economic actors decide what makes them "happy" and what decisions they make in pursuit of that happiness.
Economics is said to be positive when it attempts to explain the consequences of different choices given a set of assumptions and normative when it prescribes a certain route of action.
The term economics was coined around 1870 and popularized by Alfred Marshall. It comes from the Greek oikos- for "house" and nomos for "laws" or "norms". (Note that the word economist predated economics.) Originally, the term oikonomikos was used for different contexts: the house, a town, a city (the "polis" in Greek). This last use originated the term political economy. The term political economy has been used to denote the "classical economy" of the 19th century, with Adam Smith, David Ricardo and Karl Marx as its main thinkers. In recent years the term has also been used to describe the study of production systems which are not viewed through the lens of price, but through descriptions of the network of relationships and requirements involved in a particular economy. There are also those who use the terms economics and political economy interchangeably.