Economics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Greek for oikos (house) and nomos (custom or law), hence "rules of the house(hold)."
A definition that captures much of modern economics is that of Lionel Robbins in a 1932 essay: "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." Scarcity means that available resources are insufficient to satisfy all wants and needs. Absent scarcity and alternative uses of available resources, there is no economic problem.
The subject thus defined involves the study of choices as they are affected by incentives and resources.
Areas of study
It is a branch of economics that studies how individuals, households, and firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold.
Microeconomics examines how these decisions and behaviours affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the supply and demand of goods and services.
It involves the "sum total of economic activity, dealing with the issues of growth, inflation, and unemployment and with national economic policies relating to these issues" and the effects of government actions (e.g., changing taxation levels) on them.
(Extract from http://en.wikipedia.org/wiki/Economics)
Father of economics
Adam Smith FRSE (baptised June 5, 1723 O.S. / June 16 N.S. V July 17, 1790) was a Scottish moral philosopher and a pioneering political economist. He is a major contributor to the modern perception of free market economics
He is known primarily as the author of two treatises: The Theory of Moral Sentiments (1759) ), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
(Extract from http://en.wikipedia.org/wiki/Adam_Smith)