What is the definition of economics?

The correct answer defines economics as the study of how individuals and societies allocate scarce resources. This definition captures the essence of economics, which fundamentally revolves around the concepts of scarcity and choice. Scarcity refers to the limited nature of resources, such as time, money, and raw materials, in contrast to the unlimited wants and needs of individuals and societies.

Economics examines how these scarce resources can be used effectively to meet those needs and strives to understand the decisions made by individuals, businesses, and governments in the face of limited resources. It involves analyzing trade-offs and opportunities, assessing how resources can be optimally allocated to enhance overall well-being. This approach offers a comprehensive view of economic behavior, encompassing various aspects of life, from market dynamics to public policy.

The other options do not adequately capture the breadth of the field. For instance, focusing solely on financial institutions or consumer behavior overlooks significant areas such as production, distribution, and the interactions within economies. Additionally, categorizing economics as a branch of mathematics limits the understanding of its conceptual and theoretical frameworks that extend beyond numbers.