Intelligence HomeContact Us

Economic Intelligence

Economics is a social science that studies human behavior and welfare as a relationship between ends socially required and scarce means which have alternative uses (Lionell Robbins, 1935). That is, economics is the study of the trade-offs involved when choosing between alternate sets of decisions, considering collective and individual benefits. Understanding choice by individuals and groups is thus central in economics. With scarcity, choosing one alternative implies forgoing another alternative; economists refer to the best alternative forgone by taking another choice as the opportunity cost. For instance, learning one skill implies time not spent learning another. In a market setting, scarcity is often quantified by price relationships.

Economists believe that incentives and preferences (tastes) together play an important role in shaping decision making. Sometimes a preference relation can be represented by a utility function. Concepts from the Utilitarian school of philosophy are used as analytical concepts within economics, though economists appreciate that society may not adopt utilitarian objectives.

The subject 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.

Aspects receiving particular attention in economics are resource allocation, production, distribution or trade, and competition.

The word economy comes from the Greek oikos- for "house" and nomos for "laws" or "norms". Originally, the term economics was used for different contexts: the house, a town, a city (the "polis" in Greek).

This last use originated the term political economy, while the term economics was coined around 1870 and popularized by Alfred Marshall. Note that the word economist predated economics.

After this "change", 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

Other resources
Economics textbook(s) on Wikibooks
A source of free study notes on economics
A guide to several online economics textbooks

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.


Copyright © 2004-2007 All Rights Reserved
Information provided with no warranties. Use it at your own risk