What is economics?

The term economics comes from the Ancient Greek

 ,oikonomia, "management of a household,
administration" from oikos, "house"+nomos, "custom" or
"law", hence "rules of the house”

Economics is the social science that

studies the production, distribution,
and
consumption of goods and services.
 Alternative views

 Wealth definitions……Adam smith

 Welfare definitions…..Marshall

 Scarcity definitions….Robbins

 Growth oriented

definitions….Samuelsson
Scarcity definitions

Economics is the study of those activities of human

beings which are concerned with the satisfaction of
unlimited wants by utilizing limited resources.
Major problems of the economy
 Unlimited wants

 Scarce means

 Alternative uses of means

 Different urgency of wants; problem of choice

 Opportunity cost
Classification of economic activities

 Micro economics
the study of an individual economic unit or
group of economic units

 Macro economics
the study of aggregate or average covering
the entire income
Micro economics (major issues)

 Theory of demand
 Theory of production
 Theory of price determination
 Theory of factor pricing
 Theory of allocation of resources
 Welfare economics
Macro economics (major issues)

 Theory of national income

 Theory of employment
 Theory of money
 Theory of general price levels
 Theory of economic growth
 Theory of international trade
 Theory of distribution
 Theory of business fluctuations