Economics is the study of how individuals, institutions, and society choose to deal with the condition of scarcity. It is fascinating to see how people react to scarcity. Some create complex plans and systems to make sure that everyone gets their fair share of scarce resources. Others make things up as they go along. Everybody practices economics on a daily basis. From a single individual to the largest society on earth, people are constantly engaged in the struggle to survive, make ends meet, and even thrive given the relative scarcity they face.
Economics has been around a long time, though it has not always been known by that name. Philosophers studied scarcity and choice long before the field was so named. The father of modern economics, Adam Smith, was considered a moral philosopher, not an economist.
The people who study these choices are economists. The field of economics is huge because people have an immense range of choices. Some economists study the decision-making of individuals and institutions; others study how nations handle scarcity. Economists develop theories to explain the behavior of whatever it is they are studying. Some of these theories are then tested against real-world data, and sometimes these theories are put into practice without ever being tested. Economists work for universities, financial institutions, major corporations, and governments.
The field of microeconomics focuses its attention on the decision-making of individuals and businesses. Microeconomics is primarily concerned with markets for goods, services, and resources. Markets are central to understanding microeconomics. Whenever and wherever buyers and sellers come together to exchange resources, goods, or services, a market is created, and the behavior of these markets is of particular interest to economists. Are they functioning efficiently? Do participants have access to adequate information? Who and how many participate in the market? How do the decisions made in one market impact the decisions in a related market?
Macroeconomics is the study of how entire nations deal with scarcity. Macroeconomists analyze the systems nations create or allow for the allocation of goods and services. The questions they ask are varied and of great interest to individuals and policymakers alike. How do you measure the economy? Why does unemployment exist? How do changes in the amount of money affect the entire economy? What impact does government spending or tax policy have on the economy? How can you make the economy grow?