This document defines economics and distinguishes between micro and macroeconomics. It provides definitions of economics from various economists focused on wealth, welfare, and growth. Economics is described as both a science and an art that studies how people use limited resources to satisfy wants. Positive economics objectively describes economic situations, while normative economics makes judgments about what policies or outcomes would be good or bad for society.

1. Gandhinagar Institute of Technology
Engineering Economics and Management
Mechanical Engineering
4th : B - 2
Prepared By : Pavan Narkhede (130120119111)
Darshit Panchal (130120119114)
Guided By:
Prof. Prashant Pandya

2. Content:
▪ Define Economics.
▪ What is the difference between Micro & Macro economics?

3. What is Economics?
▪ The Word ‘Economics’ was derived from two Greek words,
Economics
Oikos Nemein
A house To Manage

4.  Which would means ‘managing a household’, using the limited funds
available, in the most satisfactory manner possible.
 Another definition of Economics is ‘a study of the ways in which people
use resources to satisfy their wants.
 Economics also means how to narrow the gap between what people
want and what they are able to get .

5.  Many persons had gave the definition in their words based on
wealth, welfare and growth.
1. Wealth : Adam smith : ‘Economics is the science of wealth’
2. Welfare : Lionel Robbins : ‘Economics is the science which studies
human behaviour as a relationship between
ends and scarce means which have alternative
uses.’
3. Growth : Paul Samuelson : ‘Economics is the study of how men and society
choose, with or without the use of money, to
produce various commodities over time and
distribute them for consumption.’

6. Scope of Economics:
▪ Economics is a science/ social science –
Science is a systematized body of knowledge that traces the
relationship between cause and effect, and economics is a branch
of knowledge where the various facts relevant to it have been
systematically collected, classified and analysed.
▪ Economics is an art –
Economics offers us practical guidance in the solution of Economic
problems.

7. Positive and Normative Economics:
▪ Positive science –
It only describes what it is and normative science prescribes what it
ought to be.
It does not indicate what is good or what is bad to the society.

8. ▪ Normative Economics –
It makes distinction between good and bad.
It prescribes what should be done to promote human welfare.
For example, “12% of labour force in india was unemployed last year”
is a positive statement, which could be verified by scientific
measurement.
But “12% unemployment is too high” is a normative statement
comparing the fact of 12% unemployment with a standard of
what is unreasonable