Economics Definition

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economice paragraph

Economics are two different things or term. 

ECONOMYEconomy is the system of producƟ on, distribuƟ on and consumpƟ on of goods and services

that a society uses to tackle the problem of scarcity of resources.

ECONOMICSThe word ‘Economics’ in English has been originated from Greek words namely; Oikos 

(household)and Nemein (management) which derives a combined meaning ‘management of 

household’.

Till 19th Century economics was known as PoliƟ cal Economy. The book named “ An Inquiry 

into the nature and causes of the wealth of NaƟ on” 1776 usually abbreviated as the “ The 

wealth of NaƟ ons” by Adam smith is considered as first modern work of economics.

It refers to the conditions under which goods are produced in a society and the way the 

people are gainfully employed.

Economics is a social science concerned chiefly with the way society choses to employ its 

limited resources which have alternative uses to produce goods and services for present and 

future consumption. 

Focusing on

Confronted with

For achieving the objectives of

The problem of choice or the problem of allocaƟ on of 

resources to their alternaƟ ve uses

Satisfaction of 

human wants

Efficient 

uƟ lisaƟ on of 

scarce resources

*System- Framework

*Goods- Tangible (which 

we can see, touch and feel)

*Services- Intangible 

(which we can only feel)

*Scarcity- Unlimited 

wants& limited resources 

Economics is a science of Huma

     scarce resources to meet their needs 

and wants, focusing on the producƟ on, distribuƟ on, and consumpƟ on of goods and services.

 MaximisaƟ on of saƟ sfacƟ on for the consumer 

 MaximisaƟ on of profit for the producer. 

 MaximisaƟ on of the welfare of the

      Economics by Some Economists

Many economists define economics in different ways. The set of definition given by different 

economists can broadly be classified into following four categories.

1.) Wealth- Adam Smith, J.B say and other classical writer. 

2.) Material Welfare- Alfred Marshall 

3.) Scarcity – Lionel Robbins

4.) Growth- Paul. A. Samuelson 

Wealth- Adam Smith 

Also known as father of economics. According to him economics is a “A science which 

studies the nature and causes of wealth of nation.”

It is criticized by Dr. Alfred Marshell as in this definition it only talks about how wealth is 

arises & how it is being used and not about mankind in which includes (love patriotism and 

all feelings) in the society as wealth defines in narrow term.

Welfare- Alfred Marshell and other Neo Classical Writers 

According to him “Economics is a mankind of ordinary business of life, its enquiry how 

he gets his income and how he spends it.”

This definition was criticized by Robbins on the following.ground:   

                                     Most emportant definition of  

        the economy

1.) Welfare is a very subjective term. We can’t quantify the welfare concern as it is 

psychic in nature.

2.) Concept of welfare change time to time, from place to place and different for person 

to person.

3.) We cannot measure it and anything which cannot be measured we can’t consider it as 

economics.

4.) It defines economics as a social science rather than a human science.

Scarcity- Lionel Robbins ( Science of Choice Making) of economics given by Robbins.

“Economics is a science which studies human behaviour as relationship between ends 

and scare means which have alternative uses.”

This definition criticized by economist as it limits the scope of 

Economics. They talk only about reducing the theory of

resource allocation. He ignores other concept of economics like unemployment, growth or 

possibilities of growth and development. He focusing only on resource allocation but if the 

resources are used efficiently but not used for the development purpose then it is useless.

So, resources should be used efficie