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Introduction To Economics

Economics is the study of how households and societies manage their scarce resources. It can be defined based on wealth, welfare, or scarcity. Economics is both a science and an art - it uses scientific principles to understand economic laws but also applies these principles to solve practical problems. Microeconomics analyzes individual markets, while macroeconomics looks at whole economies. The scope of economics includes consumption, production, distribution, exchange, and public finance.

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Marilyn Magbanua
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57 views

Introduction To Economics

Economics is the study of how households and societies manage their scarce resources. It can be defined based on wealth, welfare, or scarcity. Economics is both a science and an art - it uses scientific principles to understand economic laws but also applies these principles to solve practical problems. Microeconomics analyzes individual markets, while macroeconomics looks at whole economies. The scope of economics includes consumption, production, distribution, exchange, and public finance.

Uploaded by

Marilyn Magbanua
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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INTRODUCTION TO ECONOMICS, THEORY OF DEMAND & SUPPLY

Introduction to Economics
The word economics is derived from two greek words oikos and nemein,
Oikos means household and nemein means management so management of
household is known as economics.

Meaning of Economics
However the definitions may be classified into three categories for simplify and
clarity as under:
1) Wealth oriented definition Adam Smith, defined economics as a science
of welth. In his book entitled an inquiry into the nature and causes of the wealth of
nations published in 1776.
2) Welfare oriented definition According to Marshall, economics is a study of
mans actions in the ordinary business of life; it enquires how he gets his income
and how he used it.
3)Scarcity oriented definition In 1932, Robbins definitions as a science
which studies human behavior as a relationship between ends and scarce means
which have alternative uses.

Nature of economics
1) Economics is a science A branch of knowledge become systematic or scientific
when relevant facts are collected, classified and analyzed and laws are established
to explain the cause effect relationship between these facts. Ex. Law of
gravitational force.
2)Economics is an art Art is practical application of scientific theories:- According
to an italian economist Luigi Cossa, art does not explain theorems, it solves general
problems. It is not concerned with laws, but only with rules that simplify practice.
A science teaches as to know, an art teachers as to do.
3) Economics is an a positive & normative science According to Prof. Robins,
economics is a positive science which studies things as they are and explain their
causes & effects. Ex. Poverty in India is 26% prices are rising continuously.
4)Economics is micro and macro Micro economics is concerned with the
determinations of price of a commodity in the market under different conditions.
How rent, wages, interest etc. Macro economics deals with aggregates rather than
with individual units. It is concerned with entire economy.

Scope of economics Consumption Distribution Production Exchange


Public finance
1)Consumption Consumption refers to the use of wealth for the satisfaction of
wants and desires for material and non utility of an article and not the article itself.
The study of consumption includes characteristics and classification of human
wants, law of Equi-marginal utility, law of demand consumers surplus and soon.
2) Production The study of production of wealth man of course, cannot produce or
create matter any more than he can destroy it production, therefore, means
creation and addition of utilities, under production the main factors of productions,
the laws of return, forms of industrial organization.
3)exchange Under the modern complex economics organization it is not possible
for an individual to satisfy all his wants by his own efforts. Each individuals is
ordinarily dependent on others for the satisfactions of his wants.
4)Distribution The apportionment of the wealth produced amongst the different
factors of productions that have contributed in its production is known as
distribution. Here, the share of the various factors of production in the from or rent,
wages, interest and profit accruing respectively to land; labor capital and enterprise
will be taken into account.
5) Public finance The state today bears the responsibility not for the enface of the
country against external aggression and the maintenance of law and order at home,
but also undertakes various plans for economic and social development. For this, if
requires increasing revenue. Public finance otherwise known as the economics of
govt. studies how the govt. Obtains its revenue and how it spends it.
Microeconomics & Macroeconomics

Microeconomics The term micro economics has been derived from the Greek
term micro which means small. Micro economics analyses the output and price
of individual goods and services. In micro economics various components of
economy will be separately studied.
Macroeconomics The term macro is derived from Greek term means large.
Micro economics looks at the total national output of all goods and service
added together, or the total national income earn by everyone in the economy.
In study the economic system as a whole such as, aggregate consumption,
aggregate savings, aggregate investment, aggregate output etc.

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