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School of Economics
Ground Floor
Napier Building
The University of Adelaide SA 5005
AUSTRALIA
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Telephone: +61 8 8303 5540
Facsimile: +61 8 8223 1460

What is Economics?

Why study economics?
Two of our academics explain

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Economics investigates human behaviour and its consequences in a world with scarce resources. Families, businesses and all of society face the same problems: so much we want to do but so little time and not enough resources. Economics is about how we choose.

Economics is a way of understanding our society and community and how they interact to form "The Economy". It offers insight into the ways in which businesses are structured and compete, and the ways in which people interact and make decisions.

Economics considers the criteria we use to meet these challenges by considering costs and benefits and how to measure them. Economics provides a framework for decision making and is also about how to design institutions that help us make decisions and ensure that our decisions are 'good' from a social viewpoint.

An economist examines the role of markets in making decisions, when and how markets are regulated and the role of the government. An economist addresses issues such as:

Will an increase in taxes stimulate the economy?
Will a fall in the value of a currency cause interest rates to rise?
What causes inequality in the distribution of wealth?

To answer these macro, or community, questions, the economist has to understand decisions made at the micro, or individual level, including:

How do people and firms react to economic incentives such as goods and prices, taxes, different legal rules or market structure?
What does this imply for the wellbeing (welfare) of people?

Microeconomic principles are applied to the analysis of many issues, such as:

What happens when the sale of certain drugs is made illegal?
Commercial pressures leading to species extinction
Power generation and pricing
The pricing of commercial fishing licenses
The control of pollution
Why do concerts become ‘sell-outs’?