1 WHAT IS ECONOMICS?K e y C o n c e p t s􀂄 Definition of EconomicsThe fundamental economic problem is scarcity, which is the inability to satisfy all our wants. Because the available resources are never enough to satisfy everyone’s wants, choices are necessary. Incentives, a reward that encourages or a penalty that discourages an action, influence people’s choices.Economics is the social science that studies the choices that individuals, businesses, governments, and societiesmake as they cope with scarcity and the incentives that influence and reconcile those choices.♦ Microeconomics is the study of choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments.♦ Macroeconomics is the study of the performance of the national economy and the global economy........