introduction and definitions of business economics

1. Dr Richa Agrawal

2. The various definition of economics may be
classified in to the following four categories-
Wealth Definition- Economics as the science of
wealth.
Welfare Definition-Economics as the science of
material welfare.

3.  Scarcity definition- Economics as the science
as choice making.
 Growth oriented- Economics as the science
dynamic growth and development.

4.  In 1776 given by Adam smith in his book
“Wealth of Nation”. A subject concerned with
an enquiry in to the nature and wealth of
nation.
 Ricardo shifted the emphasis from the
production of wealth to the distribution of
wealth.

5.  Systematized body of knowledge.
 Object of study- is confined to those
activities which helped in the acquisition of
wealth.
 Economic liberty and free trade.

6.  Too much emphasis on wealth.
 Ignored social welfare- Dr Marshal has aptly
said “Economics on the one side a study of
wealth and on the other and more important
side a part of the study of man.
 Fiction of man.
 Narrowing the scope of Economics.

7.  Alfred Marshall given this in 1890 “Principle
of Economics”.
Economics is the study of mankind in the
ordinary business of life. It examines that
part of individual and social action which is
most closely connected with the use of the
material requisite of well being.

8.  Study of Man.
 Study of Economic aspect of the life of human
being.
 Study of material welfare of man.
 A social science.

9. 1.This definition is classificatory rather than
analytical in character.
 Classification of material and non material
things.
 The distinction between economic and non
economic activities is improper, illusory and
impractical.
 The distinction between ordinary business
and extra business is ambiguous and illusive.

10. 2. The welfare concept is fallacious.
 Authentic measure of material welfare is not
possible.
 Welfare depends on non physical factors.
 Economics has no relationship with welfare.
 Economics is neutral between ends.
 The welfare definition of economics ignore
the fundamental problem of scarcity of
resources.

11.  This definition is given by prof.Leonel
Robbins in 1932-According to him
 “Economics is the science which studies
human behavior as a relationship between
ends and scarce means which have alternative
uses”.

12.  Ends here refers to unlimited wants.
 Scarce means The second element which give rise
to economic problem is that means or
resources(i.e. money and time)to satisfy wants
are scarce in relation to its demand.
 Alternative uses of means The third element
which give rise to economic problem is that the
scarce means or resources at our disposal are
capable of being applied to alternative uses.

13.  Economics covers the theory of economic
growth and development but Robbins totally
ignored Economic growth and development.
 Economics is positive as well as normative
science
 Robbins definition is static in content and
inadequate.
 The difference between ends and means is
not very clear.
 Economics is a social science.

14.  Economics is not merely a value theory.
Economics is much more than value theory.
 Robbins definition is too narrow. Abundance
can also be a problem for the society
 Economics is not neutral between ends.
Economics has to play an important role in
social welfare and economic growth, it has to
give decisions as to what is good and what is
bad to achieve this ends.

15.  Growth Definition (1948) According to Prof.
Paul A Samuelson “ Economics is the study of
how men and society choose with or without
the use of money, to employ the scarce
productive resources which have alternative
uses, to produce various commodities over
time and distribute them for consumption
now and in future.


16.  Dynamic and wider in scope
 Includes element of time and growth
 Dynamic definition
 Deals with the problem of choice