Definition of Economics

Introduction

Economics refers to the social science that studies the economic activities. The economic progress of mankind has been a step wise process starting from the evolution of man, to the modern socio-economic development.

The economy and its constituents include production, consumption, exchange and distribution. There are various definitions of economics. These include: Wealth definition by Adam Smith, he defined economics as “a science of wealth”. The features of wealth definition are that it involves the study of wealth, considers man as an economic being with self-interests, etc. The criticism of wealth definition is that it gives too much stress on wealth and material goods and the way it considers the concept of economic man. Welfare Definition was propounded by Prof. Alfred Marshall and later supported by Prof, A.C Pigou, As per the wealth definition, “Economics is the study of mankind in the ordinary business of life; it examines that part of individual and social action which deals with the attainment of the use of material requisites of well-being”. The features of welfare definition are study of ordinary business of life, mankind and material welfare. The criticism of welfare definition are non-material welfare ignored, no proper explanation, welfare cannot be quantified and limited scope. Scarcity definition, according to Lionel Robbins, Economics is a science that studies the human behavior as a relationship between ends and scarce means which have alternative uses. The features of scarcity definition are multiplicity of ends, scarce means, alternative uses of means, efficient use of scarce resources and science of choice. The merits of scarcity definition are more scientific, universal, wider and analytical definition. The criticisms of scarcity definition are that it is too wide a definition, neglects economic growth and development, etc. The demerits of scarcity definition are that it is contradictory, not applicable to rich countries, etc. Growth Definition as given by Prof. Samuelson defines economics as study of how people and society end up choosing with or without the use of money, to employ scarce productive resources that could have alternative uses to produce various commodities over time and distributing them for consumption, now or in the future, among various persons and groups in society. The features of growth definition of economics are increase in productivity, solution to economic problem, growth of resources, etc.

The scope of economics includes the subject matter of economics which is studied in two parts microeconomics and macroeconomics, nature of economics, which deals with economics as a science or an art and importance and limitation of economics.

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  • Q1

    Amongst the following which of the following is a feature of growth?

    Marks:1
    Answer:

    Dynamism

    Explanation:

    Dynamism is a feature of Growth. Economics is considered with determining the pattern of employment of scarce resources to produce goods overtime. Thus, the dynamic problem of production has been brought within the purview of economics. 

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  • Q2

    Which of the following economists considered economics as science of choice making?

    Marks:1
    Answer:

    Lionel Robbins

    Explanation:

    Lionel Robbins considered economics as Science of choice making. According to him “economics is the science which studies human behaviour as a relationship between ends and scarce means which have their alternative uses”.

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  • Q3

    Which one is a feature of Scarcity definition of economics from the following given options?

    Marks:1
    Answer:

    Unlimited Human Wants

    Explanation:

    Scarcity of resources in relation to unlimited human wants leads to the problem of making a choice which creates economic problem. Lionel Robbins considered economics as Science of choice making. According to him (scarcity definition of economics) “economics is the science which studies human behaviour as a relationship between ends and scarce means which have their alternative uses”.

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  • Q4

    Amongst the following given options which one is not a feature of economics as wealth

    Marks:1
    Answer:

    Study of Ordinary Business of Life

    Explanation:

    Study of Ordinary Business of Life is a feature of Welfare definition of economics. It means every person acts mainly to earn and collect wealth and spends those earnings to get the maximum enjoyment. Marshall called this activity ‘the ordinary business of life’.

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  • Q5

    Adam Smith considered economics as -

    Marks:1
    Answer:

    Science of Wealth

    Explanation:

    Adam Smith defined economics as, “A science which enquires into the nature and causes of wealth of nations.”

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