A distinguished British economist named Lionel Robbins gave a classic definition of economics: Economics is the study of the use of scarce resources which have alternative uses.

Economic policies need to be analyzed in terms of the incentives they create, rather than the hopes that inspired them.

Regardless of our policies, practices, or institutions—whether they are wise or unwise, noble or ignoble—there is simply not enough to go around to satisfy all our desires to the fullest.

Prices play a crucial role in determining how much of each resource gets used where and how the resulting products get transferred to millions of people.

Many people see prices as simply obstacles to their getting the things they want.

Money doesn’t even have to be involved to make a decision be economic. When a military medical team arrives on a battlefield where soldiers have a variety of wounds, they are confronted with the classic economic problem of allocating scarce resources which have alternative uses.

Although a free market economic system is sometimes called a profit system, it is in reality a profit-and-loss system—and the losses are equally important for the efficiency of the economy, because losses tell producers what to stop doing—what to stop producing, where to stop putting resources, what to stop investing in.

Continuing transactions between buyer and seller make sense only if value is subjective, each getting what is worth more subjectively. Economic transactions are not a zero-sum process, where one person loses whatever the other person gains.

economics studies the consequences of decisions that are made about the use of land, labor, capital and other resources that go into producing the volume of output which determines a country’s standard of living.