If you search a definition for economics, you'll typically see something like this:
1(n). a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services.
But if we study the subject, we found out that at its most basic, economics is a study of scarcity and choice.
Scarcity is the basic fact that we can't have everything we want. We're going to be limited, by something be it time, money, effort, social pressure, whatever.
And when we hit that limit, we need to make a choice.
Take a look at this graph:
This is a famous economics graph called the "Butter and Guns PPF". Forgetting all the technical stuff; it represents a choice we need to make. We can produce alot of butter but few guns, vice versa, or anything in between.
Points B D and C represent choices that are at the limits of our ability. Point A is under. And point X is beyond our ability to produce.
One thing that economics teaches us is that what works on a large scale often works on an individual scale as well.
Whether we're a nation producing butter and guns, or a parent dividing our time up between work and kids, we all face choices.
In the parent example, we are limited by our time (and perhaps our sanity). How do we decide what are the right choices to make?
I'll talk about it in my next economics post, where I discuss the law of diminishing marginal returns.
