1.1 What Is Economics?

The issues described in the introduction would not matter much if we
lived in an economy of such plenty that there was always enough to fully
satisfy everyone’s wants. If we could always get all the things we wanted,
it wouldn’t be so important to be more productive in our work. Rapid
growth in health-care spending would not be such a problem if
governments had no limits on what they could spend. And rising
protectionism would not be so threatening if Canada did not rely on the
income earned by selling our many exported products to other countries.
But such an economy with unlimited products and income is impossible.
Why?

The short answer is because we live in a world of scarcity. Compared with
the desires of individuals for things such as better food, clothing, housing,
education, clean water and health care, the existing supplies of resources
are clearly inadequate. They are sufficient to produce only a small fraction
of the goods and services that we desire. This scarcity gives rise to the
basic economic problem of choice. If we cannot have everything we want,
we must choose what we will and will not have.

One definition of economics comes from the great economist Alfred
Marshall (1842–1924), who we will encounter at several points in this
book: “Economics is a study of mankind in the ordinary business of life.”
A more informative definition is: