Introduction to Economics

Economics is the social science that studies how individuals, businesses, governments, and societies make choices about how to use scarce resources to satisfy their unlimited wants and needs. As defined by Lionel Robbins in his seminal work "An Essay on the Nature and Significance of Economic Science" (1932), economics is "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."

Historical Foundations: The foundation of modern economics is often traced to Adam Smith's "An Inquiry into the Nature and Causes of the Wealth of Nations" (1776). Smith introduced the concept of the "invisible hand" and argued that individuals pursuing their own self-interest could lead to beneficial outcomes for society as a whole.

Core Economic Principles

• Scarcity: The fundamental economic problem that resources are limited while human wants are unlimited
• Opportunity Cost: The value of the next best alternative that must be forgone when making a choice
• Supply and Demand: The basic forces that determine prices in a market economy
• Market Efficiency: The extent to which markets allocate resources efficiently

Branches of Economics

• Microeconomics: Studies individual consumers, firms, and markets
• Macroeconomics: Studies the economy as a whole, including inflation, unemployment, and economic growth
• International Economics: Studies trade between nations and global economic issues
• Development Economics: Studies economic growth and development in developing countries