What are economics?

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Economics is the word used to describe subject areas dealing with the exchange of goods and services. When studying or talking about economy, we’re looking at stuff like the things people need and want, how people produce and get those things, how much of it they have, and how they’re able to get those amounts. <!--[endif]-->

When goods and services are made in an economy it’s known as production. Production refers to the materials, labor (work), and other things that are required to make goods (from TVs to staplers to granola bars, and more) and have services (from firefighters to teachers to fishermen and more). 

The people in an economy who buy things with money and trade goods and services are known as consumers. Every “trade” you make, like buying movie tickets, purchasing a new winter hat, or swapping baseball cards with a friend, makes you a consumer. <!--[endif]-->

Economics also deals with things like supply and demand (how much of something there is and how much of it people want), distribution (how much people have and why), and needs and wants.

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You might think of economics (or the exchange of goods and services) as being all about money, but really money is just used to help in the exchange; when we pay for things with money, what we’re really doing is trading goods and services.

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Economics might sound like something very complicated and distant, but it can be easy to see examples of the different aspects of economics in everyday life! Think, for example, about going to the grocery store to buy milk. You might notice that the price of milk has gone up by $0.50 since the last time you bought it. What are some of the economic factors that might cause milk to increase in price? Some ideas might be lower supply (fewer dairy farmers), greater demand (more milk buyers), or increased production cost (such as the cost of the gasoline needed to drive the milk from the farm to your store).

What are some other examples of economics that you can see in your daily surroundings?