Economics is the study of the way the society uses resources, how goods and services are produced, and the distribution of wealth. Economists use these insights to analyze the economic situation and determine how the economy can be improved. They also investigate the role of government policies in the economy.
Economic data is used by businesses, financial institutions, and government agencies to evaluate commodity prices and determine the health of a specific market. These organizations leverage the information to make policy decisions.
The basic concepts of economics involve supply and demand. A shortage is an imbalance between the demand for a good or service and the availability of the resource. An increase in price means a decrease in supply.
Inflation refers to a rise in the price of goods or services over a period of time. It is a common measure of economic growth. However, other metrics are often employed.
Economics also focuses on how scarce resources are allocated. If there are more of one thing than there are of another, the economy will be in trouble. This situation is known as an opportunity cost.
Some people choose to spend less when there is an abundance of something. This reduces the amount of spending and increases the need for the thing. For example, a person may spend less on gasoline. But they will feel worse off.
A function of economics is to understand how to achieve full employment. This is accomplished by learning the factors that govern production, the role of government incentives, and the relationship between end and scarce means.