Why Economics?

Economics studies the ordinary business of life — a phrase used by Alfred Marshall, one of the founders of modern economics, who described the subject as the study of people going about their everyday livelihood. It is about how ordinary people earn their living and spend what they earn.

A useful way to enter the subject is through the everyday roles people play in the economy:

• Consumer — a person who buys goods to satisfy personal needs, the needs of the family, or even to give a gift to someone else.
• Seller — a person who sells goods to earn a profit, such as a shopkeeper.
• Producer — a person who makes goods (a farmer or a manufacturing company) or provides services (a doctor, porter, taxi driver, or transporter).
• Employee — a person who works for someone else and is paid wages or a salary in return.
• Employer — a person who engages others to work and pays them a wage.

All of these are described as being gainfully employed in an economic activity — that is, an activity undertaken for a monetary gain. Taken together, this everyday round of buying, selling, producing, and working is what economists mean by the ordinary business of life, and it is the raw material the subject sets out to understand.