The Ohio State University

Economics is the study of choices that individuals, business and government entities make when allocating limited resources among alternative uses. For example, individuals must choose what goods or services to purchase with their limited incomes. Business firms must decide which goods to produce, how much to produce and what methods to use. Government bodies must choose which programs to implement and which taxes to levy. 

Economists develop theories to explain how components of an economy operate and interact with one another. They then gather statistical and empirical evidence to estimate the relationships among the various aspects of the economy. Using these data, economists predict how different economic entities will respond to changes in policies and external forces. These predictions, in turn, help guide private and public decision-makers to form appropriate policies.