Economics

This section focuses on the science of economics, its key topics, and our attempt to explain it in a simple and accessible way. As the old joke goes — if you gather five economists in a meeting to reach a single conclusion, they will leave disagreeing on seven different decisions. For that reason, we aim to simplify the meaning of economics and explore some of its core topics. We hope you find it useful.

Economics in Simple Words

If you ever went to buy a kilogram of tomatoes and found the price unusually high or surprisingly low, and you asked the seller why — the answer would likely be: "It's supply and demand." In those three words, that seller told you exactly what economics is about. Economics is the study of supply and demand, and the factors that influence them.

As with most sciences, economics is essentially the study of things that happen around us every day — with the goal of understanding patterns, building theories, and making predictions. People apply economic thinking all the time without realizing it:

• Merchants know that certain months are peak seasons where demand rises.
• People link rising prices to rising fuel costs.
• Some call for boycotting products from a certain country or company to hurt its economy.
• Businesses run advertising campaigns to drive demand.
• Prices rise when the dollar strengthens.
• Markets go through periods of boom and recession.

All of this is economics in action.

What economics does is study these everyday phenomena and attempt to extract theories and predictions from them. At its core, all of economics revolves around the study of supply and demand and the factors that affect them. And because economics ultimately depends on human behavior and human preferences — what economists call consumer taste — it becomes one of the most complex sciences, which explains why five economists can leave a meeting with seven opinions.

Economics studies these phenomena at two levels: the individual level and the national level. This gives us the two main branches of the field:

• Microeconomics — studies economic behavior at the level of individuals, households, and firms.
• Macroeconomics — studies the economy at the level of nations and the world as a whole.

And that, in short, is economics.