Economics is defined as the social science that studies how individuals, businesses, governments, and nations allocate scarce resources to satisfy unlimited wants. It uses scientific methods like data collection and theory building. Economics can be applied to solve problems and meet economic goals. The scope of economics includes both positive analysis that describes economic systems objectively, and normative analysis that makes recommendations about economic policy. Traditional approaches study economics through consumption, production, exchange, distribution, and public finance, while modern approaches use microeconomics focusing on individual and business decision-making and macroeconomics looking at aggregate economic activity and performance.

1. UNIT – I
BASIC ECONOMICS
BY:
AMBRIN B
Assistant Professor
Dept. of Civil Engineering

2. 'Economics’
Economics is derived from a Greek word
‘OKIOS NEMEIN’ meaning household management. It
is a social science concerned with the production,
distribution and consumption of goods and services. It
studies how individuals, businesses, governments and
nations make choices on allocating resources to
satisfy their wants and needs, and tries to determine
how these groups should organize and coordinate
efforts to achieve maximum output.

3. Satisfaction of Individual Human ‘wants’

4. Satisfaction of collective Society ‘wants’

5. • Economists use the scientific method to make generalizations and
abstractions to develop theories. This is called theoretical
economics.
• These theories are then applied to fix problems or meet economic
goals. This is called policy economics.
How is Economics used?

6. Economics Definitions
1. Wealth Definition. Adam Smith
2. Welfare Definition. Alfred Marshall
3. Scarcity Definition. Lionel Robbins
4. Growth Definition. Paul Samuelson

7. SCOPE OF ECONOMICS
Scope means province or field of study
(i) Economics – A Science and an Art
(ii) Economics - Positive and Normative

8. Traditional Approach
 Economics is studied under five major divisions:
1. Consumption: Extracting utility from goods and services.
2. Production: Production of goods and services which posses
utility.
3. Exchange: means buying and selling of goods and services. It is
link between consumer and producer.
4. Distribution: Sharing of income by the four factors of
production.
5. Public finance : it studies how the government gets money and
how it spends it. Thus in public finance, we study about public
revenue and public expenditure.

9. (a) Economics is a science:
By applying the characteristics of science,
we find that economics is a branch of knowledge
where the various facts relevant to it have been
systematically collected , classified and analysed.
(b) Economics is a art:
An Art is a system of rules for the attainment of a given end.

10. Modern Approach
 It divided into :
(i) Micro-economics
(ii) Macro-economics
The terms micro and macro derived from Greek.
Mikros (small) and makros (large).
Micro means individualistic and macro aggregative.

11. The Factors of Production