ABSTRACT
This chapter explores the economic problem and discusses the evolution of economy from feudalism to mercantilism, to a market economy, and to a pragmatic market economy. It summarizes the historical development of socialist thought and aims to distinguish between a planned and an unplanned economy. The chapter explains the terms supply and demand, and use them to explain how a market economy works. It describes why all modern economies are pragmatic market economies. The chapter considers how people and societies allocate resources among alternative ends to achieve their wants. It also explores economics as the study of the social organization through which people satisfy their wants. The chapter examines how economies are organized, before that, economists tend to play a more active role as policy advisers than do other social scientists, and also considers how economists approach problems. Economists bring a unique analytical approach to looking at social problems, an approach that emphasizes rational choice and costs and benefits.
