Economics is the study of human action—the choices people make in a world of scarcity. Scarcity means that people have unlimited wants but we live in a world of limited resources. Because of this fact people have to make choices, and choices imply trade-offs. The choices people make are influenced by the incentives they face and those incentives are shaped by the institutions—rules of the game—under which people live and interact with others.In this essay, I will explain eight ideas and give examples of the economic way of thinking.
