Economics, broadly speaking, is the study of how people make choices among the various available alternatives. Economics is a social science; it is "social" because basic economic theory examines people and their behavior, and "science" because the concept of economics entails hypothesis formation, testing, mathematical modeling and equations.

An adequate intro to economics does not require an extensive perusal of graphs or solving complex functions, only a familiarity with a few everyday words with specific meanings in the economic field.

Scarcity, Choice and Cost

For all people, the basic economic problem is meeting needs given a finite amount of resources with which to accrue those needs. "Scarcity" underscores the distinction between what people want and what they truly need to survive; because human wants (not needs) exceed the capacity of people to produce what is wanted, there is a scarcity of some goods or commodities. Not everyone can get an A in every course or finish in the top five of every cycling race.

"Choice" in this context means the decision to allocate resources toward a given good. Usually, this comes at the cost of something else. If you decide it is more important to you to buy a new video game than to repair your bicycle, and cannot afford both, buying the game comes at the cost of fixing your bike.

Basic Economic Theory: Supply and Demand

Any introduction to economics course places the concept of supply and demand front and center, and even those who have little interest in economics are likely to hear the term "law of supply and demand" bandied about. Usually, supply and demand curves (or lines) are graphed together to show the relationship between rising or falling supply, rising or falling demand, and price. Supply shortages and demand increases tend to drive up prices, as people compete to a greater extent for a given resource. If supply increases in accordance with demand, the price may remain the same.

Microeconomics vs. Macroeconomics

The distinction between these two sub-fields of economics is somewhat arbitrary, but important. Macroeconomics concerns the aggregate choices of members of a society and things that affect whole populations, such as inflation and unemployment. Microeconomics concerns individual and small-group choices, such as firms attempting to maximize their business profits.

Gross Domestic Product

Gross domestic product, or GDP, is a continual element of the U.S. news cycle. GDP is a measure of a nation's total output and hence a measure of its economic strength. Mathematically, it is the sum of consumer spending, consumer investment, government spending and net exports. Consumer spending is just what it sounds like, everyday people purchasing goods from merchants. Investment, this context, means business investment, such as a company putting money into a new office building. Government spending includes endeavors such as infrastructure projects (e.g., roads and bridges). Exports are simply goods sold to other countries, while imports are goods bought from other countries. Net exports are negative when imports exceed exports in value (this is called a trade deficit).