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Definition of Economics

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. It began as "household management" in ancient Greece and was later defined as the "science of wealth" and a study of how people engage in everyday economic activities and satisfy unlimited wants with limited resources. The scope of economics includes the analysis of economic problems at the individual and societal level, how resources are used and allocated, and how economic development occurs through planning.

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Hussnain Shah
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49 views

Definition of Economics

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. It began as "household management" in ancient Greece and was later defined as the "science of wealth" and a study of how people engage in everyday economic activities and satisfy unlimited wants with limited resources. The scope of economics includes the analysis of economic problems at the individual and societal level, how resources are used and allocated, and how economic development occurs through planning.

Uploaded by

Hussnain Shah
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Definition of economics

The English term Economics is derived from the Greek word Oikonomia. Its meaning is household management. Economics was first read in ancient Greece. Aristotle, the Greek Philosopher termed Economics as a science of household management. Towards the end of the eighteenth century Adam Smith, the celebrated English Economist and the father of Economics, termed Economics as the Science of Health. According to him, how wealth is produced and how it is used, are the subject-matter of economics. In the subsequent period Alfred Marshall defined Economics by saying, Economics is a study mankind in the ordinary business of life. In modern times more realistic definitions have been given to economics. In social life human wants are unlimited, but the means to satisfy those wants are scarce. Economics studies how to use the limited resources to satisfy the unlimited wants of men. So, Economics as a social science studies how people perform economic activities and how they try to satisfy unlimited wants by the proper use of limited resources. Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.

Scope of economics
Economics is a social science. The subject matter of economics deals with the analysis of economic problems of people in the society and the satisfaction of their wants. Scope of economics is discussed below: 1. As social science economics deals with the economic activities of human being. One person day to day money earning and money spending activities constitute the subject matter of economics. For example, parents affection and nursing service for their children are not the subject matter of economics. 2. Resources are needed to satisfy people's wants. So, the availability of resources and their use are important subject matter of economics. Adam Smith has termed economics as the Science of Wealth. 3. People's wants are unlimited. But the resources to satisfy the wants are scarce. Economics discusses how men can get the maximum satisfaction by using the scarce means to satisfy wants on the basis of priority. 4. People's wants are related to production, exchange, distribution and consumption. Again, currency, banking system, public finance, trade etc is also parts of economic activities. Economics discuss these issues also. Besides, how economic development of the country is achieved through the means of economic planning is also included in the subject matter of economics. 5. Economics also discusses about the value judgment of human actions and behavior.

Importance of the study of economics


In modern times the importance of the study of economics is infinite. It is not only provides us knowledge, but also helps to solve the different problems in real life. The importance of economics in different areas of human life is discussed below: In the daily life of people: People are confronted with manifold wants in their daily life. But the resources to satisfy those wants are limited. By studying economics we can know the use of limited resources to satisfy alternative wants on the basis of priority. In the proper use of resources: We can learn about the use of resources with the knowledge of economics. Study of economics helps us to understand about how to produce the maximum output by the proper use of limited resources. In state management: The knowledge of economics is indispensable to manage the economic and development activities of a state. For this reason the politicians and the govt. officers need to have proper knowledge of the currency system, banking system, tax system, industrial and trade policy, budgeting etc. The knowledge of economics helps in managing the state affairs. To social workers: The social workers need to have knowledge of economics to diagnose and solve the problems of poverty, unemployment, illiteracy, excessive growth of population, lack of housing and medical facilities etc.

Microeconomics Vs. Macroeconomics


Economic analysis is divided into two main branches: microeconomics and macroeconomics. Greek word Micro means small. Microeconomics is the study of decisions of people and business and the interaction of those decisions in markets. The goal of microeconomics is to explain the prices and quantities of individual goods and services. Microeconomics also studies the effects of government regulation and taxes on the prices and quantities of individual goods and services. On the other hand, Macro means big. Macroeconomics is the study of the national Economy as well as global Economy and the way that a Economic system work. The goal of macroeconomics is to explain general price level, national income, employment, production. Macroeconomics also studies the effects of Government actions-taxes, spending and the deficit on total incomes and price level.

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