2. The word Economics is derived from the Greek
words “OKIOS NEMEIN” meaning household
management .
Man is bundle of desires. Goods and services
satisfy these wants. But almost all the goods are
scarce. To produce goods land, labour, capital
and organization are needed. Economic
problem arises because of scarcity.
Economics is a study of economic problems.
Wants are motive force for economic activity.
Wants leads to efforts. Efforts secures
satisfaction.
4. 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. 1. Wealth Definition. Adam Smith
2. Welfare Definition. Alfred Marshall
3. Scarcity Definition. Lionel Robbins
4. Growth Definition. Paul Samuelson
6. Father of Economics Adam Smith in his book “
Wealth of Nations 1776” defined economics is
the study of wealth.
J.B Say, J.S Mill, Walker, B.Price all agreed that
Economics is concerned with wealth.
In this definition wealth is given first place, man
has given second place
7. Walras in his book Elements of pure economics
“wealth definition is unscientific one.”
Carlyle. Ruskin, Dickens criticized it as dismal
science.
Carlyle “ It was a Gospel of mammon and pig
science.
Economics criticized as bread and butter
science.
Economics is science of ills and not wealth.
8. Alfred Marshall in his book “Principles of
Economic Science-1890” defined Economics is
the study of man kind in the ordinary business of
life.
“Economics is one side a study of wealth; and
on the other side more important side a part of
study of man
He made economics is a science of human
welfare.
9. 1. Mainly concerned with the study of man in
relation to wealth.
2. First place to man, second place to wealth.
3. It studies man not in isolation but a member of a
social group.
4. Definition considered only material welfare,
ignored immaterial welfare.
10. 1. Restricted scope of economics –considered only
material goods.
2. Robbins objected the word material and the idea
‘welfare’. There are some goods which do not promote
human welfare. Ex. Liquors, cigarettes.
3. Welfare is subjective, it cannot be measured.
4. Economics is neutral between ends. No way
concerned what is good and what is bad.
5. Economics is not a social science. Robbins regards as
a human science.
11. Lionel Robbins in his book ‘Nature and
Significance of Economic Science-1932
given scarcity definition.
“Economic is the science which studies
human behavior as a relationship
between ends and scarce means which
have alternative uses.”
13. 1. Robbins included material and non material
goods ,widens the scope of economics.
2. He made economics a positive science.
3. His definition is universal.
14. Economics Noble prize winner (1970) Paul Samuelson
proposes a dynamic definition in his book
Economics(1948)
Economics is the study of how people and society end
up choosing with or without money to employ scarce
productive resources that could have alternative uses to
produce various commodities and distribute them for
consumption, now or in the future among various
persons and groups in society. Economic analysis the
cost and benefits of improving patterns of resources use.
15. 1. Scarcity : Unlimited wants ,scarcity of resources and
alternative uses.
2. Dynamism: The importance of time is brought in the
definition.
3. Economic growth: His definition gave importance to
economic growth
4. Wide scope: Economic choice exist not only in a
monetary economy but also in a barter economy.
5. Problem of choice: Definition explains problem of
choice in present and future in dynamic conditions.
16. Economics noble prize winner (1969), Ragner Frisch was
the first to use the terms micro and macro in economics in
1933.
The terms micro and macro derived from Greek. Mikros
(small) and makros (large).
Micro means individualistic and macro aggregative.
17. Micro economics is the study of particular firms,
households, individual prices and particular
commodity.
Micro economics is based on the assumption of full
employment and ‘ceteris paribus’ (other things
remain constant).
Micro economics was popularized by David
Ricardo, Marshall, J.B Say and J.S Mill.
Micro economics called as ‘ Price Theory.’
18. Macro economics is the study of economic
system as a whole.
Macro economics studies aggregates values like
National Income, National output, general price
level, total consumption, saving and investment
of a country.
Macro economics is called ‘ Income and
Employment theory.’
J.M Keynes popularized macro Economics
Where micro economics explain a tree in the
forest, macro economics explains all the trees in
the forest.
19. The French sociology philosopher Augustine
Compte used the terms ‘static and dynamic’ first
time in social science.
J.S Mill was the first to use these terms in
economics.
Clear and scientific distinction between the two
terms made by Ragner Frisch in 1928.
20. The word ‘static’ derived from the Greek ‘statike.’
which means bringing to a stand still. It means a state
of rest or no movement.
According to Clark, where five kinds of changes are
conspicuous by their absence. The size of population,
the supply of capital, methods of production, forms of
business organization and wants of people.
Static economy thus a time less economy where no
changes occur.
Static is like a snapshot from a ‘still.’
21. Dynamic is the study of change .
Economic dynamics is concerned with time lags,
rates of change,
Economic dynamics is the running picture of the
working of the economy.
22. To study economics, two methods are there.1.Deductive
method, 2. Inductive method.
Deduction proceeds from general to particular while
induction proceeds from particular to general.
23. 1. This method deduces conclusions from the truths
established by other methods.
2. It involves the process of reasoning from certain laws
or principles which are assumed to be true, to analysis
of facts.
3. “Deduction as a descending process” in which we
proceed from a general to principle to particular.
4. It as ‘a priori’ method and also called it abstract and
analytical method
5. Ricardo regarded as the first economist who applied
this method.
6. Ex; the law of diminishing returns.
24. 1. It is intellectual method, near to reality.
2. This method is simple.
3. The use of mathematics brings exactness.
4. Universal validity.
25. 1. This method based on assumptions.
2. Inadequate data.
3. Lerner criticised this method is simply armchair
analysis.
26. This method involves the process of reasoning from
particular to general.
It as an ‘ascending process’.
This method involves four stages:
1.observation; 2. formation of hypothesis
3.generalisation; 4. verification.
This method was introduced by German historical
school Roscher, Hillbrand, and Fedric List.
27. 1. This method proceeds from particular to general,
it is thus realistic.
2. Helps in future enquiries.
3. Statistical method.
4. Dynamic.
28. 1. Statistical numbers can be misused and
misinterpreted.
2. Probable.
3. Time consuming and costly method.
4. Differ from investigator to investigator for the
same problem.
29. Economics is the social science that studies the production, distribution, and
consumption of goods and services. Economics aims to explain how economies
work and how economic agents interact. Economic analysis is applied throughout
society, in business and finance but also in crime, education, the family, health, law,
politics, religion, social institutions, and war. Economic textbooks distinguish between
microeconomics ("small" economics), which examines the economic behavior of
agents (including individuals and firms) and "macroeconomics" ("big" economics),
addressing issues of unemployment, inflation, monetary and fiscal policy.
Business economics (also called managerial economics), is a branch of economics
that applies microeconomic analysis to specific business decisions. As such, it
bridges economic theory and economics in practice. It draws heavily from
quantitative techniques such as regression analysis and correlation, Lagrangian
calculus (linear). If there is a unifying theme that runs through most of business
economics it is the attempt to optimize business decisions given the firm's objectives
and given constraints imposed by scarcity, for example through the use of operations
research and programming
