HL.b.1—Economics definition

Define economics as the study of allocation.

Economics studies how people and institutions produce, distribute and consume goods and services when resources and choices are limited.

A water-allocation decision compares competing household, farm and ecosystem uses.

Supply, demand, incentives and distribution help explain who gets a resource and at what cost.

Key idea: Define economics as the study of allocation.

Economics is not only the study of money or markets.