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Economics is a social science that studies society's allocation of scarce resources to meet desires and wants. Economics therefore starts from the premise that resources are in limited supply and that it is necessary to choose between competing alternatives. With scarcity, choosing one alternative implies foregoing another alternative; economists refer to this as opportunity cost.

A further aspect is how incentives (the consequences of different courses of action) affect individual or group behavior. Economists tend to think that incentives and preferences (tastes) together play an important role in shaping decision making. Aspects receiving particular attention in economics are trade, resource allocation, and competition.

Economics is often said to be positive when it attempts to explain the consequences of different choices and normative when it prescribes a certain route of action.