Chapter 1: Meaning and Definition of Economics: Flashcards
What is the meaning of Economic Activities? What is their main purpose?
All those activities which are concerned with money or wealth are knows as economic activities. Their main purpose is to satisfy human wants.
What are the different types of economic activities? Explain.
- Production: It includes the economic activity which is concerned with the utility and price of the goods. The
- Consumption: It consists of the economic activity which is concerned with the use of goods and services for the direct satisfaction of want.
- Distribution: It deals with those economic activities which are related to the determination of price of the Factors of Production.
- Exchange: It is related to the sale and purchase of a commodity.
What are the factors of Production? What do they provide?
Factors of Production are: Land, Labour, Capital, Entrepreneurship. They provide Rent, Wages, Interest and Profit respectively.
What are the elements of economic activities?
- These activities are concerned with the production, consumption, distribution and exchange of economic goods.
- They are those activities which refer to those human activities which are concerned with money or wealth.
- The main purpose of economic activities is to satisfy human wants.
What are non-economic activities?
They refer to those activities which have no economic aspect or are not concerned with money or wealth. Such activities can be grouped as under:
- Social Activities
- Political Activities
- Religious Activities
- Recreational Activities
- Parental Activities
- Charitable Activities
What is the distinction between economic and non-economic activities?
- Objectives: If an activity is performed for acquiring wealth, it is called an economic activity. If the same activity is performed for entertainment, religion, love, patriotism, etc., it will be a non-economic activity.
- Measurement: Activities which can be measured in terms of money are called Economic Activities. Activities which cannot be measured in terms of money are called non-economic activities.
- Legality: Economic Activities are the wealth related activities according to the law of the land. Non-economic activities can be both legal and illegal.
What are the 4 major definitions of economics and who coined them?
Wealth Definition: Adam Smith
Welfare Definition: Professor Alfred Marshal
Scarcity Definition: Professor: Lionel Robbins
Growth Definition: Professor Paul Samuelson
What is the definition of the Wealth definition given by Adam Smith? In which book did he mention this?
Adam Smith, in his book ‘An enquiry into the nature and causes of wealth of nations’ (1776), defined economics as the study of ‘wealth’. The great objective of the political economy of every country is to increase the riches of the country. Therefore, Adam Smith thought of economics as ‘an enquiry into nature and causes of wealth of nations’. According to him, economics is a subject which tells you how to make a nation wealthy.
What is the definition of the Welfare definition given by Professor Alfred Marshal? In which book did he mention this?
Professor Alfred Marshal, in his book ‘Principles of Economics’, gave a material welfare definition of economics.
- He gave more importance to human welfare in comparison to wealth.
- He defined economics as “a study of mankind in the ordinary business of life. It examines that part of individual and social actions which is most closely connected with the attainment and use of material requisites of well-being”.
- He said that wealth is only a means to satisfy man’s wants and is not an end in itself.
What is the definition of the Scarcity definition given by Professor Lionel Robbins? In which book did he mention this?
According to him economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.
He gave his definition in his book, An Essay on the Nature and Significance of Economic Science (1932).
According to this definition, economics studies those activities of human beings which they perform to obtain scarce means having alternative uses in order to satisfy their unlimited wants.
Economics studies human behaviour as a relationship between unlimited wants and limited means which are capable of having alternative uses.
This is the universal definition of economics
What is the definition of the Growth definition given by Professor Paul Samuelson?
According to professor Paul Samuelson, Economics is the study of how man 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 people and groups of society.
What are the features of the wealth definition?
- Study of wealth: According to the wealth definition, the only proper subject of economics is wealth.
- Study of material good only: The term ‘wealth’ has been used only for material goods which are scarce and useful. Non-material goods have not been considered as wealth.
- Economic Man: Wealth definition lays emphasis on the man who does all activities of self-interest. Such a man motivated by self-interest is known as economic man.
What are the features of the welfare definition?
- Study of Mankind: Economics studies the economic activities of human beings. It studies the role of man in the creation of wealth or income.
- Study of Ordinary Business of Life: Every person acts mainly to earn and collect wealth and spends those earnings to get the maximum enjoyment. Marshal called this activity the ordinary business of life.
- Study of material welfare: Economics does not study the whole of human welfare but only the welfare which is of material type.
What are the features of the scarcity definition?
- Unlimited ends: Human wants are unlimited.
- Scarce means: Resources at our disposal to satisfy these wants are also scarce or limited.
- Alternative Uses of Means: Not only are our means scarce, but they can be put to a number of uses.
- Efficient Use of Scarce Resources: These wants are to be ranked in the order of priority. On the basis of these priorities, the scarce resources are to be used in an efficient manner for the satisfaction of these wants.
- Science of Choice: Since wants are numerous and means are scarce, we have to select the most urgent wants from the numerous. In this case, the scarcity of means makes choice necessary. That is why economics is defines as the science of choice.
What are the features of the growth definition?
- Efficient allocation of resources: emphasised the need of choice which arises due to scarce resources and unlimited wants.
- Growth of Resources: available resources should not only be used properly, but efforts should also be made to increase them so as to satisfy the ever-increasing wants.
- Solutions to Economic Problem:
- Dynamism: This definition lays that economics is concerned with determining the pattern of employment of scarce resources to produce goods over time. Thus, the dynamic problem of production has been brought within the purview of economics.
