The Job of the Economy

 

The job of the economy is to manage the scarcity of resources and attempt to satisfy as many of our wants as possible through the production of goods and services.

 

The activities of people involved in the production of goods and services make up the economy.  For instance, a nurse administering a vaccine is providing a service that goes towards our health care needs ; a fisherman bringing crabs to market is helping meet our needs and wants for food.
Economics is a social science that studies how people manage their scarce resources in order to satisfy as many of their unlimited wants as possible.
 

Because of scarcity, many decisions have to be made:

  • Which goods and services do we produce?  Amongst all our wants, which ones will we satisfy?  Healthcare?  Entertainment?  Roads?  How much of each?
  • How to we produce those goods and services?  Which resources do we use?  More labor, more capital?  Which technology do we choose?
  • To whom are these goods distributed?  Does everyone get all goods?  How do we decide who gets them?

Who answers those questions and how, will determine the kind of economic system your economy will follow.