.I~I~ T，: ~)q~I~T)ONS I~kBL)UT LI;UNUMIL，~<br > m<br >l:h~， m~: ~: ::mswms Io five questions about economics that students are likely<br >What Is Economics?<br >Without matter and motion， there would be no physics; without living things， there<br >would be no biology; and without scarcity， there would be no economics.<br > Scarcity is the condition where our wants are greater than the limited resources<br >available to satisfy those wants. Scarcity is the basic economic problem that all<br >individuals and societies face.<br > Since there would be no economics without scarcity， economics is defined as<br >the science of scarcity. Specifically， it is the science of how individuals and soci-<br >eties deal with the fact that wants are greater than the limited resources available<br >to satisfy those wants.<br >What Do Economists Study?<br >Economists study markets， prices， costs， production， inflation， unemployment， in-<br >terest rates， business cycles， budget deficits， trade deficits， exchange rates， and so<br >on. These are many of the subjects discussed in this book.<br > But economists increasingly study other areas of human activity as well--such<br > things as crime， family relationships， war， politics， psychology， the law， and much<br > more.1<br > Economists today do not have a preconceived notion of what they should and<br > should not study. They may simply observe the world until something captures<br > their attention or piques their curiosity. They then apply economic analysis--<br > composed of the tools of economics and the economic way of thinking--to what-<br > ever it is that they are interested in.<br > This may seem like an odd way to proceed. Some noneconomists think it would<br > be better if economists decided on the 30 or so topics they feel they are best<br > equipped to study and then study these and no more. But economists believe this<br > approach grossly underestimates the power of economic analysis. Although econ-<br > omists do not believe that economics can explain everything about the world， they<br > do believe it can explain much about it. An objective of this text is to show you<br > that economic analysis is more powerful at explaining your world to you than you<br > may have believed was possible. -<br > What Is the Economic Way of Thinking?<br > In general， the economic way of thinking refers to the way economists view， in-<br > terpret， and analyze the world. Consider an analogy from the field of architecture.<br > Suppose you see a skyscraper in New York City. To your untrained eye， you see<br > only a building that rises high into the sky. An architect sees much more. She sees<br > a certain form and style; she sees the way that geometric shapes have come together<br > to create an atmosphere and a mood. She sees things that others are blind to.<br > So it is with the economist. In a grocery store you may see shelves of food and<br > drink. An economist sees more. He sees buyers and sellers having come together<br >