This document discusses key concepts in economics. It defines economics as the science of material well-being according to Alfred Marshal and the science of choice making according to Lionel Robbins. The document outlines decisions that must be made in an economy, such as what and how to produce, for whom to produce, and how to allocate resources. It considers whether economics is a science, art, or social science, and concludes it is best defined as a social science. The document also discusses basic assumptions in economics like ceteris paribus and rationality, and principles for making economic decisions like scarcity, opportunity cost, and production possibility curves.

1. NAME :- GAUTAM CHOPRA
CLASS :- BBA (TAXATION)
TOPIC :- DEFINE ECONOMICS

2. WHAT DO YOU UNDERSTAND BY ECONOMICS?
There are several other definitions of ECONOMICS given by
different different economist, they are :-
1. Science of wealth :- by “ADAM SMITH”(Father Of
Economics)
2. Science of material well being :- by Alfred Marshal
3. Science of choice making :- proff. Lionel robbins,etc

3. WHAT TYPES OF DECISIONS ARE TAKEN IN
ECONOMICS ?
An economy has to face various problems while an economy is running
they are :-
1. What to produce? :- At 1st we should know what kind of goods
to be produced whether capital goods or consumer goods.
2. How to produce? :- this decision is related to the technique of
production to be used in production labour intensive, or capital
intensive technique of production.
3. For whom to produce? :- You will produce goods for whom? , for
which society, for rich/poor. This is also very difficult task.
4. How much to allocate?
5. Are resources economically?
6. Are resources fully utilized?
7. Is the economy growing?

4. NATURE & SCOPE OF ECONOMICS:- SCIENCE, ART
OR SOCIAL SCIENCE?
 There may be a question in your mind whether Economics is
science, Social Science or art ?
 As it is a systematic body of knowledge , so we can say it
SCIENCE.
 But on the other hand if we apply it in or practical life it is an
Art.
 BUT REALLY WHAT IS ECONOMICS ?
As per my previous definition of economics it deals with
the social welfare of country as whole
SO IT IS BETTER IF WE SAY IT “SOCIAL SCIENCE”

5. WHAT ARE THE BASIC ASSUMPTIONS OF
ECONOMICS?
while we study economics we have to take certain assumption without
these assumptions we can’t take any decision, so what are they?
THERE ARE TWO ASSUMPTIONS IN ECONOMICS THEY ARE
AS FOLLOWS:-
1. Ceteris Paribus :- ceteris paribus is a laten term but it actually
means “other things remaining constant”. while we are studying an
economic factor or any economic term we we assume that other
things remaining constant.
for example ;- suppose we are studying demand of the commodity
then think that other factors that affect demand are constant.
a) Taste and prefference
b) Expectations
c) Income level of buyer

6. 2. Rationality :- economics makes an assumption that consumer
acts rationally, here rationally means that before he buys any
good he will check his cost and benefit and afterword’s , where
he will get maximum benefit or satisfaction there he will
proceed For example :-
the consumer will think that weather to buy juice from
the market or to make it at home , however it would be more
enjoyable to buy it from market ,but It may be costlier . So consumer
have rational mind.

7. ON WHAT BASIS ECONOMIC DECISIONS ARE
TAKEN ?
There are several principals which help to take economic decision,
they are :-
1. Concept of scarcity :- human have unlimited wants but resources
are limited or scarces to there wants.
2. Concept of opportunity Cost :- because resources are limited and
wants are unlimited all wants cannot be satisfied then we have to
sacrifice some wants, And the value of next best alternative is
oppurtunity cost.
3. Production possibility curves
4. Concept of marginal & incremental :- marginal means additional.
If there is a change between two units is of only unit then it is
marginal concept , if more than one then it is incremental concept.
5. Discounting principle & compounding principle
6. The “Invisible Hand”