Economics studies how people, businesses, and governments make decisions about using limited resources. The fundamental problem of economics is scarcity: there are unlimited wants but limited resources.

Supply and demand determine prices in a market economy. When demand increases and supply stays the same, prices rise. When supply increases and demand stays the same, prices fall. The equilibrium price is where supply and demand meet.

Opportunity cost is what you give up when making a choice. If you spend $20 on a book, the opportunity cost is whatever else you could have bought with that $20.

Governments influence economies through taxation, spending, and regulation. Fiscal policy involves government spending and taxation. Monetary policy involves managing the money supply and interest rates.