ECONOMICS
The English term ‘Economics’ is derived from the Greek word ‘Oikonomia’. Its meaning is
‘household management’. Economics was first read in ancient Greece. Aristotle, the Greek
Philosopher termed Economics as a science of ‘household management’. But with the
change of time and progress of civilization, the economic condition of man changes. As a
result, an evolutionary change in the definition of Economics is noticed. Towards the end of
the eighteenth century Adam Smith, the celebrated English Economist and the father of
Economics, termed Economics as the ‘Science of Wealth’.
DEFINITIONS OF ECONOMICS
ADAM SMITH’S DEFINITION OF ECONOMICS
Adam Smith was a Scottish philosopher, widely considered as the first modern economist.
Smith defined Economics as study of wealth in his book “An inquiry into the nature and
causes of the wealth of nations.”
ALFRED MARSHALL’S DEFINITION OF ECONOMICS
British economist Alfred Marshall defined economics as “the study of man in the ordinary
business of life.” Marshall argued that the subject was both the study of wealth and the
study of mankind. He believed it was not a natural science such as physics or chemistry, but
rather a social science.
LIONEL ROBBIN’S DEFINITION OF ECONOMICS
, Lionel Robbin, another British economist, defined economics as the subject that studies the
allocation of scarce resources with countless possible uses. In his 1932 text, “An Essay on
the Nature and Significance of Economic Science,” Robbins said the following about the
subject:
“Economics is the science which studies human behaviour as a relationship between
ends and scarce means which have alternative uses.”
MODERN DEFINITION OF ECONOMICS
The modern definition, attributed to the 20th-century economist, Paul Samuelson, builds
upon the definitions of the past and defines the subject as a social science. According to
Samuelson,
“Economics is the study of how people and society choose, with or without the use of
money, to employ scarce productive resources which could have alternative uses, to
produce various commodities over time and distribute them for consumption now and
in the future among various persons and groups of society.”
THREE ECONOMIC PROBLEMS
1. Limited resources: Resources like labour, land, and capital are insufficient as
compared to the demand. Therefore, the economy cannot provide everything that
people want.
2. Unlimited Human Wants: Human beings’ demands and wants are unlimited which
means they will never be satisfied. If a person’s one want is satisfied, they will start
having new desires. People’s wants are unlimited and keep multiplying, therefore,
cannot be satisfied because of limited resources.
3. Alternative Uses: Resources being scarce, the same resources are used for different
purposes. and it is therefore essential to make a choice among resources. For instance,
petrol is used in vehicles and is also used for generators, running machines, etc.
Therefore, the economy should now make a choice within the alternative uses.
The English term ‘Economics’ is derived from the Greek word ‘Oikonomia’. Its meaning is
‘household management’. Economics was first read in ancient Greece. Aristotle, the Greek
Philosopher termed Economics as a science of ‘household management’. But with the
change of time and progress of civilization, the economic condition of man changes. As a
result, an evolutionary change in the definition of Economics is noticed. Towards the end of
the eighteenth century Adam Smith, the celebrated English Economist and the father of
Economics, termed Economics as the ‘Science of Wealth’.
DEFINITIONS OF ECONOMICS
ADAM SMITH’S DEFINITION OF ECONOMICS
Adam Smith was a Scottish philosopher, widely considered as the first modern economist.
Smith defined Economics as study of wealth in his book “An inquiry into the nature and
causes of the wealth of nations.”
ALFRED MARSHALL’S DEFINITION OF ECONOMICS
British economist Alfred Marshall defined economics as “the study of man in the ordinary
business of life.” Marshall argued that the subject was both the study of wealth and the
study of mankind. He believed it was not a natural science such as physics or chemistry, but
rather a social science.
LIONEL ROBBIN’S DEFINITION OF ECONOMICS
, Lionel Robbin, another British economist, defined economics as the subject that studies the
allocation of scarce resources with countless possible uses. In his 1932 text, “An Essay on
the Nature and Significance of Economic Science,” Robbins said the following about the
subject:
“Economics is the science which studies human behaviour as a relationship between
ends and scarce means which have alternative uses.”
MODERN DEFINITION OF ECONOMICS
The modern definition, attributed to the 20th-century economist, Paul Samuelson, builds
upon the definitions of the past and defines the subject as a social science. According to
Samuelson,
“Economics is the study of how people and society choose, with or without the use of
money, to employ scarce productive resources which could have alternative uses, to
produce various commodities over time and distribute them for consumption now and
in the future among various persons and groups of society.”
THREE ECONOMIC PROBLEMS
1. Limited resources: Resources like labour, land, and capital are insufficient as
compared to the demand. Therefore, the economy cannot provide everything that
people want.
2. Unlimited Human Wants: Human beings’ demands and wants are unlimited which
means they will never be satisfied. If a person’s one want is satisfied, they will start
having new desires. People’s wants are unlimited and keep multiplying, therefore,
cannot be satisfied because of limited resources.
3. Alternative Uses: Resources being scarce, the same resources are used for different
purposes. and it is therefore essential to make a choice among resources. For instance,
petrol is used in vehicles and is also used for generators, running machines, etc.
Therefore, the economy should now make a choice within the alternative uses.
