Definition: The term epidemic refers to an infectious disease that is widespread in a population (many individuals affected), but localized in distribution to a particular region or locality.
In contrast, an pandemic is widespread in the population and covers a large geographic area; sometimes even global in distribution.
The agent of disease is usually viral or bacterial. Diseases transmitted between animals and humans (zoonotic diseases) are common, such as the recent cases of Swine Flu.
The word epidemic originates from Latin (epidemia) and Greek1 (epidemia). Epi- means "staying in one place" and -demos means "people."
Reference1: Dictionary.com
Photo: Pig in a field © jere-me on Flickr.
Pronunciation: epi-dem-ick
Examples:
The local health officials called the outbreak an epidemic as the number of people admitted to the hospital increased.

