The document provides an overview of introductory economic concepts including definitions of economics by Adam Smith, Marshall, Robbins, and Samuelson focusing on wealth, welfare, scarcity, and growth. It discusses microeconomics and macroeconomics, the subject matter and scope of economics, relationships to other subjects like political science and statistics, and methods of economic analysis including inductive and deductive approaches. The document appears to be teaching materials for an introductory economics course that defines fundamental terms and outlines the nature and scope of the economic field of study.

1. Dr. Smriti Mathur
Assistant Professor
Babu Banarasi Das University,
Lucknow
PhD (Commerce), UGC NET
(Commerce)
M.Com (Applied Economics)

2. This video
covers
C
O
N
T
E
N
T
S
Introduction to Economics, economic
problem, Opportunity cost
1
Definitions of Economics by Adam Smith,
Marshall, Robbins and Samuelson2
Subject matter of economics, Nature of
economics, Relationship of economics with
other sciences and Limitations of Economics
3
Methods of economic analysis - Inductive
method and Deductive Method
4

3. • The term Economics was first coined by Adam Smith in the year 1776. He is called as the Father of
Economics.
• The word Economics is derived from Greek Words “OIKOS” means “a House” and “NEMEIN” means “to
Manage”.
I n t r o d u c t i o n t o E c o n o m i c s

4. T H E E C O N O M I C P R O B L E M : S C A R C I T Y A N D C H O I C E
 Central Problem of an Economy: The scarcity of resouces relative to human wants gives rise to
various economic problems called as Central problems of the economy. These problems are -
What to produce, how to produce and for whom to produce.
 Scarcity of Resources: Human wants are unlimited and productive resources such as land and
other natural resources, skilled labour, raw material, capital equipment with which to produce
goods or services to satisfy those wants are scarce and limited.
 Problem of Choice: Problem of Choice emerges when limited resources are to be used for
satisfaction of unlimited wants.
 Scarcity and Choice are inseparable at all levels of decision - making.
 Opportunity Cost: The opportunity cost of a good or service is the value of the next best
alternative good or service that is given up for it.


6. Emphasis on
Wealth
Imagination of
Economic Man
Study on Nature of
Wealth
Individual and
social interest are
not mutually
contradictory
According to Adam Smith:
“Economics is an inquiry into the nature and causes of wealth of nations”.
W E A LT H D E F I N I T I O N : A D A M S M I T H
Narrow Scope
More importance
to wealth than
man
Individual and
Social interests
may be conflicting
to each other
No emphasis on
Scarcity and
Choices

7. Primary
concern to
man
Study of
Ordinary
Human Beings
Economic as a
Material
Welfare
Economics as
a Social
Science
Normative
Science
According to Prof. Marshall:
“Economics is a 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 attainment and with the use of the material requisites of well
being”.
W E L F A R E D E F I N I T I O N : P R O F. M A R S H A L L
Narrow Scope
Emphasis on
Material Aspect
Considers only
Social Science
Considers
Welfare as
objective and is
measurable
Considers as
Normative
Science

8. Unlimited
Wants
Scarce Means
Alternative
Uses of
Means
Economics is
neutral
between ends
Economics is
a Science of
Choice
According to Prof. Lord Robbins:
“Economics is the science which studies human behaviour as a relationship between ends and scarce means
which have alternative uses”.
S C A R C I T Y D E F I N I T I O N : P R O F. L O R D R O B B I N S
Includes concept
of Economic
welfare
Assumption of
neutral between
ends
Neglects issues
of Modern
Economics
Undue
prominance to
Scarcity
Limited to
Allocation of
Resources
Considers
Economics as
Positive Science

10. Efficient allocation
of resources
Time factor
Elaborative
Improvement in
resource allocation
and Distribution
Study of Macro
economics
According to Samuelson:
“Economics is the study of how people and society end-up chosing, with or without the use of money to
employ scarce productive resources that could have alternative uses to produce various commodities overtime
and distribute them for consumption now or in future, among various persons and groups in the society. It
analyses costs and benefits of improving patterns of resource allocation”.
G R O W T H O R I E N T E D D E F I N I T I O N : S A M U E L S O N
Realistic
assumption of
Economic
Problem
Science and Art
Includes both
material and non
material
approaches
Practical
Dynamic Subject

11. S C O P E O F E C O N O M I C S

12. S U B J E C T M AT T E R O F E C O N O M I C S

13. Prof. Ragner Frisch of Oslo University in 1933 introduced the terms - Microeconomics and
Macroecomics.

14. M I C R O E C O N O M I C S

15. M A C R O E C O N O M I C S

16. Economics as a Science: Science is a
systematic body of knowledge concerning the
relationship between causes and effects of a
particular phenomenon.
Following features testify economics as a
science:
 Collection of Facts
 Cause and Effects of economic events
 Economic laws are universal
 Economic facts are measured
But this is contradicted by some scholars
who do not consider as exact science.
 Positive Science
 Normative Science
Economics as an Art: Art is the practical aspect of
science.
 Economics is an Art because practical techniques
are employed in economics to achieve economic
ends.
According to Prof. Chapman, “Economics studies
economic facts and events in real way as a positive
science. It explores the possibilities that what ought
to be the status of economic matters as normative
science, and finally, it finds out solutions to fulfill
desirable economic ends as an art”
N AT U R E O F E C O N O M I C S

17.  Economics and Political Science
 Economics and Statistics
 Economics and Mathematics
 Economics and Accounting
 Economics and Operations Research
 Economics and Management Science
Relationship of Economics
with other subjects
 Study of Human activities only
 Study of Rational man
 Assumption based Principles
 Economic laws are not exact and
universal
 Economics is controversial
 Studies only economic activity.
Limitations of Economics

18. INDUCTIVE METHOD
Also called as Empirical method.
Characterised by shift from the Particular
to General.
Stages in the process of Induction:
 Identification of Problem
 Collection of data
 Observation
 Generalisation
Economic laws and theories are derived
on the basis of experiments and
observations.
Based on dynamic analysis.
More suitable for macro economics.
Slow Process
DEDUCTIVE METHOD
Also called as Abstract method, Analytical method
or Hypothetical method or a Priori method.
Characterised by shift from the General to
Specific.
Stages in the process of Induction:
 Perception of the problem
 Making assumptions
 Formulating assumptions
 Testing and verifying the hypothesis
Make use of certain core principles and
conclusions arrived at through other methods,
analyse them and come out with innovative
inferences.
Based on static analysis.
More suitable for micro economics.
Quick Process
METHODS
OF
ECONOMIC
ANALYSIS

19. TO BE
ANSWERED
Q
U
E
S
T
I
O
N
S
Discuss the definitions of Economics.1
Explain following concepts - Scarcity, Choice,
Economic problem and Opportunity cost.2
Distinguish between Micro and Macro
economics.
3
Discuss traditional and modern approach to
subject matter of economics.
4
5
What are various method of economic
analysis.
Explain the relationship of economics with
other subjects.6
Explain the nature of economics.
7