Concept of Economics
Economics is the science that deals with the production, distribution, and consumption of goods and services, or the material welfare of humankind. It is a social science which studies and explains human behavior. But economics is a new social science as compared to other social sciences. Before 18th century economics was treated as part of Political Science, Ethics and Religion. The 18th century classical economists developed it as a separate social science. Economics is a science in the sense that the economists aim to develop theories of human behavior and to test them against the facts.
It is customary to begin elementary economic theory with a definition of economics. Nothing, however, is settled by definition. A wide subject like economics cannot be restricted to a boundary fixed by definition. Economics extends to the subjects covered and methods used by the economists. Similarly, it also suggests that boundary of economics changes as the range of subject covered by economists changes.
Definitions of Economics
Economics is essentially a study of the usage of resources under specific constraints, all bound with an audacious hope that the subject under scrutiny is a rational entity which seeks to improve its overall well-being.
Two branches within the subject have evolved thus: microeconomics (individual choices) which deals with entities and the interaction between those entities, while macroeconomics (aggregate outcomes) deals with the entire economy as a whole.
The economic science has been differently defined by different economists. Each definitions lays stress on particular aspect of economic activities. The definitions of economics can be classified into three parts for convenience. They are wealth definition, welfare definition and scarcity definition of economics.
Economics Basics – Demand & Supply
It is perhaps one of the most fundamental tenets and provides a fundamental framework in which to assess the actions of an economy.
Definition of Demand: Demand is the quantity of a good (or service) the buyers are willing to purchase at a particular price.
Definition of Supply: Supply is the quantity of a good the sellers are willing to deliver at a particular price. Meanwhile price is a result of the constant tug-of-war between the demand and supply.
And all other random things kept constant for a good (brand, quality etc.); higher the price— lower will be the demand from the consumer (to save up for other purchases).
The basic propositions of Robbins definition are as follows:
- Wants or ends are unlimited
- Means are scarce
- Scarce means have alternative uses
- The ends are of varying importance.