Economics : Key points to remember Class 11

 Key Points to Remember: Economics

                

1) Economics

👉 Derived from Greek words "Okionomia" or "Oeconomicus" which means managing households.

2) Wealth Definition / Classical Definition / Adam Smith's Definition

👉 By Father of economics Adam Smith (1723 - 1790 AD).

👉 Book: "An Enquiry into the nature and wealth of nation" in 1776 AD.

 👉 "Economics is the Science of Wealth".

*Features of this definition

    1) Study of wealth

    2) Secondary place to the study of men

    3) Meaning of wealth

    4) Study of Economic men

    5) Investigation of causes of wealth / Sources of Wealth

*Criticisms of this definition

    1) Too much importance to wealth

    2) Lack of human welfare

    3) Wrong Concept of Economic men

    4) Narrow Definition

3) Welfare Definition / Neo - Classical Definition / Alfred Marshall's Definition

👉 By Alfred Marshall (1842 - 1924 AD).

👉 Book: "Principle of Economics" in 1890 AD.

 👉 "Economics is Study of Men in Ordinary Business of Life".

*Features of this definition

    1) Study of ordinary men

    2) Study of material welfare

    3) Primary Concern to Welfare

    4) Economics is Social Science

    5) Economics is Normative Science

*Criticisms of this definition

    1) Lack of clarity about Ordinary business of life

    2) Welfare cannot be measured

    3) Economics is human science

    4) Narrow Definition

4) Scarcity Definition / Modern Definition / Lionel Robbins's Definition

👉 By Lionel Robbins (1898 - 1984 AD).

👉 Book: "An Essay On the nature and significance of Economic Science" in 1932AD.

 👉 "Economics is a science which studies human behavior as relationship between unlimited ends and scarce means which has alternative uses."

*Features of this definition

    1) Unlimited Ends

    2) Limited Means

    3) Alternative use of Resources

    4) Problem of Choice

    5) Wants differs in urgency

*Criticisms of this definition

    1) Even Abundance may create economic problems

    2) Economics is not only positive science

    3) Hidden concept of welfare

    4) Incomplete Definition / Doesn't includes modern economic problems (like poverty, unemployment, etc.)

5) Positive Economics

👉 Introduced by Adam Smith, Alfred Marshall and David Ricardo.

👉 Economics which studies reality is positive economics.

👉 It explains cause and effect relationship between economic issues.

👉 It enquiries "What is?"

6) Normative Economics

👉 Introduced by Alfred Marshall.

👉 Economics which gives judgement based on norms and values.

👉 It makes decisions about economic issues without analysis.

👉 It enquiries "What ought to be?"

7) Microeconomics

👉 Introduced by K.E Boulding.

👉 Derives from Greek word "Mikros" which means small.

👉 Economics which deals with individual economic issues is known as microeconomics.

👉 Studies subject matters related to individual economic issues like a producer, consumer.

👉 Market equilibrium depends upon market demand and supply.

👉 Utility maximization for consumer and profit maximization for producer is its main objective.

7) Macroeconomics

👉 Introduced by K.E Boulding.

👉 Derives from Greek word "Macros" which means large.

👉 Economics which deals with aggregate economic issues is known as macroeconomics.

👉 Studies subject matters related to aggregate economic issues like GDP, unemployment.

👉 Market equilibrium depends upon aggregate demand and supply.

👉 Economic development, Price Stability its main objective.