Economics is the science of studying human behavior in response to unlimited wants and limited resources. Definition: The social science concerned with the production, distribution, and consumption of goods and services. Key concepts include scarcity (unlimited wants with finite resources), choice (decisions on what to produce), and efficiency (optimal use of resources). Economics addresses fundamental questions: What to produce, How to produce it, For whom to produce. Adam Smith termed it 'Political Economy'. Modern economics (Marshall, Robbins) emphasizes rational decision-making. ICAI tests: Definitions and fundamental concepts, distinction between needs and wants. Exam tip: Remember "scarcity" is THE foundation of all economic activity; answer choices mentioning unlimited resources are always wrong.