Meaning Of Economics

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Welcome to class! 

In today’s class, we will be talking about the meaning of economics. Enjoy the class!

Meaning Of Economics

At the end of this lesson, you should be able to;

• Explain the term Economics
• Relate the various definitions of Economics
• Justify the reasons for studying Economics

NOTE

Economics as a dynamic subject has very many definitions.  It is often said that there are so many definitions of economics as there are economists because they see the subject from a different point of view.

Some definition given by some economists includes:

Adam Smith (18^th Century British Economist and Called “Father of Economics”) in 1776 defined economics as “an inquiry into the nature and causes of the wealth of nations”.

John Stuart Mill in 1843 defined economics as “the practical science of production and distribution of wealth”

Alfred Marshal in 1890 defines it as “a study of mankind in the ordinary business of life, earning and enjoying a living”.

J. Daven Port defines economics as “a science that treats phenomena from the standpoint of price”.

Edvins Canon defines economics as “the study of things having to do with man’s material welfares”.

A.I. Pigou defines economics as “the study of how total production could be increased so that the standard of living of people might be improved’’.

However, the most acceptable and widely used definition was by Professor Lionel C. Robins in 1932, which defines economics as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses”. The reasons for the popularity of this definition is twofold, namely, it is the only definition which mentions:

• The basic economic problem of scarcity and choice.
• The fact that economics is a social science.

The scope of economics

1. Economics relies on the findings of other social sciences which include ethics, political science, sociology, geography, psychology, philosophy, anthropology, etc., to reach a sound conclusion concerning human behaviour. This inter-relationship with other social sciences promotes a wider general understanding of social behaviour.
2. Economics is a social science which studies human behaviour or mankind’s economic activities concerning production, exchange, distribution and consumption of goods and services.
3. It deals with how people react to economic situations and how they behave while engaged in their daily economic activities.
4. Economics deals with the administration of scarce resources in society.
5. Economics is positive in its study of human behaviour by concerning itself with “What is’, and not normative with “What should be’, and thus point out the full cost – the real or opportunity cost – of achieving our ends.

Self-evaluation:

1. Give three definitions of economics?
2. Write a short note on the scope of economics.

The branches of economics

Economics is broken down into two main broad areas: Microeconomics and Macroeconomics.

Microeconomics is the branch of economics that deals with economic action or behaviour of individuals, household and firms. It centres on the analysis of individual prices, market and allocation of specific resources to particular uses e.g. demand and supply etc.

Macroeconomics in the other hand is the study of the economy as a whole includes among other economic aspects such as inflation, National income, investment, unemployment, international trade etc.

Self-evaluation:

1. How would you define Economics?
2. What are the two branches of Economics? Explain

Why do we study economics?

Economics as social science studies human behaviour of the individual, firm and government in the ordinary business of life due to the following reasons:

1. The study of economics provides the students with the basic skills for analyzing economic problem thereby preparing them better for positions where economic decisions are needed.
2. It enables a student to understand the nature of the complexity of economic activities.
3. It is useful in analyzing patterns of socio-economic behaviour.
4. The knowledge of economics is useful to understand the effects of the inequalities in the distribution of income and opportunity.
5. It helps the government to promote growth and development thereby improving their standard of living.

5. It enables students to understand and appreciate various government policies where choices have to be made.
6. It is useful in effective allocation of scarce resources to various sectors of the economy.

Self-evaluation:

1. In 2 paragraphs, explain why we study economics
2. Who is the father of economics and how did he define economics?

Reading assignment

Amplified and Simplified Economics for SSS by Femi Longe page 1-3

General self-evaluation

1. What are Economic activities?
2. Write six producer goods.
3. List three classical Economist school of thought
4. State two theories put forward by classical school of thought.
5. Highlight two Neo-classical schools of Economic thought.

Theory

1. Give the generally accepted definition of Economics
2. Give three definitions of economics.

 

In our next class, we will be talking about Economics as a Science, Art or a Social Subject.  We hope you enjoyed the class.

Should you have any further question, feel free to ask in the comment section below and trust us to respond as soon as possible.

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