(a) Lange (1945) defines economics as “the science of the administration of scarce resources in human society”. What does he take this to mean?
(b) Distinguish briefly between theoretical economics, applied economics and welfare economics.
(c) Lange suggests that “the statements of economic science have objective validity”. What does he mean by this? Why do disagreements arise in economics?
(d) Distinguish between an ideology and a science. Do you think economics is an ideology or a science?
2. Alfred Marshall in 1890 defined economics as “ the study of man in the ordinary business of life ” .
Lange (1945) took this and defines economics as “ the science of the administration of scarce resources in human society ” . Buchanan (1979) suggests that the “ proper subject for economists is man ’ s behaviour in market relationships, reflecting the propensity to truck and to barter and the manifold variations in structure that these relationships can take ” .
Outline and compare Lange ’ s view of economics as a “ science of choice ” with Buchanan ’ s view of economics as a “ science of exchange ” .
1. What concept is illustrated by Leonard Read’s short article I, Pencil ? [Do not repeat the narrative of the story.]
2. Economists apply Cost-Benefit Analysis (CBA) to examine the outcome of a decision or change. This allows a comparison of the gains and losses that arise in many situations.
Outline briefly the advantages and disadvantages associated with one of the following issues. Also state whether it is possible to determine whether the change will be on the whole good or bad for the factor listed?
Increased paper recycling on the number of trees.
Increased car safety features on accidents and injuries.
Reduced use of chemical crop pesticides on cancer rates.
Economists are not automatons and as human beings they are subject to a great multiplicity of influences, some conscious, most subconscious, which determine their conclusions as laid down in the literature of economics.
Economists, like all others, live under the institutions of a historic society and under the standards of its civilisation.
They share in its beliefs and values, prejudices and interests, horizons and limitations.