WHAT IS ECONOMICS?

Boiled down to its essence, Economics is a science that investigates the choices people, businesses and governments are forced to make because of a fundamental truth: resources are scarce. This might seem kind of boring and irrelevant at first, until you start to think about all of the situations in which this concept of scarcity-forcing-choice arises. Here are some examples:

• The ultimate scarcity is probably that of time. There are only 24 hours in each day – there’s no getting around it! Up until this moment of this day, you have probably made dozens of choices about how to use your time. Every time you chose to do one thing, you gave up the opportunity to do something else. Why did you have to make that choice? Because time is scarce. If we expand the time period to semesters, we can discuss your choice to attend college this term. What else could you have done with that time?

• You have money to spend. We won’t discuss how much, but if you’re like most people it’s not enough! Because you don’t have enough money to buy everything you want, you again have to make choices. Do you drive a car? Have you bought gas recently? How much did you buy? What made you decide to buy 8 gallons, say, and not 9 gallons? Or 7 gallons? Questions like those are the bread-and-butter of Economics. If you take econ, you will be taught to approach the question of choice step-by-step: Will the consumer buy another gallon of gas? Why or why not?

• What if a government is trying to decide whether to fight a war? Wars have two main costs. First there is the loss of human life, which is – of course – tragic. The other main cost consists of what was given up so that the nation could go to war. What else could have been done with those tax revenues, or debt, or both? Or could taxes have been lowered?

• What about trade? Trade is why businesses are in business. What is it about trade that makes it so desirable? Is there a downside to trade?

Etc., etc., etc. To explore this all further, take econ classes! But remember that Economics is a science, and thus – if you’re like most people – it will take hard work and practice to fully appreciate what it has to offer. If you do the work, and if you try as much as possible to apply what you learn to your own daily life, you are likely to enjoy Economics.

See you in class!

Department of Economics, College of Arts & Sciences
5307, Friedmann Hall, 1903 West Michigan Avenue
Western Michigan University, Kalamazoo MI 49008
Phone: (269)-387-5535 Fax: (269)-387-5637

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