Principles of economics

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STUDY MATERIAL

for

ECONOMICS-1:PRINCIPLES OF

ECONOMICS UNIT-I: Introduction to

Economic

Definition of Economics –

1. Wealth definition,

2. Welfare definition,

3. Scarcity definition and

4. Growth Oriented definition

Introduction to economics

Economics is concerned with aspects of the production, exchange,

distribution, and consumption of commodities, but this claim and the

terms it contains are many times considered as vague. Economics is

much wider than what it is said.

The conception of the economy as a distinct object of study dates

back to the 18th century. Aristotle addresses some problems that most

would recognize as pertaining to economics are mainly as problems

concerning how to manage a household.

Philosophers addressed ethical questions concerning economic behavior,

and they condemned the subject as it gives importance for money. With the

increasing importance of trade and of nation-states in the early modern

period, ‘mercantilist’ philosophers stressed on the balance of trade and the

regulation of the currency.

Only in the eighteenth century, the physiocrats, David Hume and especially

Adam Smith, came up with the thought that there is a need for laws to be

discovered that govern the complex set of interactions that produce and

distribute consumption goods and the resources and tools that produce

them.

Adam Smith’s insight and his contribution in his systematic Inquiry into the

Nature and Causes of the Wealth of Nations led to emergence of Economics

as an independent subject.

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Thus economics emerged as an independent subject in 1776.

Economics was known addressed by different names, and are -

Whatley called economics as Catallactics or the

science of exchange. Hearn addressed it as Plutology

meaning science of wealth.

Ingram named it as Chrematistics or science of money making.

Economics was earlier known as Political economy, and was studied along

with political science. The term Economics is derived from Greek words,

Oikos meaning a house and nemein to manage. Thus economics is art of

managing a household with one’s limited resources to satisfy one’s

wants/desires.

Wealth definition of Economics

Adam smith is a Scotland economist. He was born in 1723A.D and died in

1790A.D. He published a “An inquiry into the nature and causes of the

wealth of nation” in 1776A.D. and with this publication economics got its

independent identity. Adam smith is known as Father of economics.

According to him,” Prosperity of the individuals constitute the prosperity

of the nation. Gain of wealth or after acquiring, the man can achieve his

satisfaction”

Thus Adam smith regarded economics as the science which studies

the production and consumption of wealth.

J.B. Say- “Economics is the science which treats Wealth”.

Walker- “Economics is the body of knowledge which relates to

wealth”. Senior- “The subject Treated by political economics is

not happiness but wealth”. J.S. Mill- “Economics is the practical

science of production and distribution of wealth”.

For Adam Smith economics looks into those factors that determine wealth

of a country and its growth. He quotes in his book that without proper

utilisation of a country’s resources it cannot grow its wealth and riches.

Production and expansion of wealth were the subject matter of study of

economics. Over the period, David Ricardo shifted the emphasis from the

production of wealth to distribution of wealth.

Critical evaluation

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STUDY MATERIAL for ECONOMICS-1:PRINCIPLES OF ECONOMICS UNIT-I: Introduction to Economic Definition of Economics – 1. Wealth definition, 2. Welfare definition, 3. Scarcity definition and 4. Growth Oriented definition Introduction to economics Economics is concerned with aspects of the production, exchange, distribution, and consumption of commodities, but this claim and the terms it contains are many times considered as vague. Economics is much wider than what it is said. The conception of the economy as a distinct object of study dates back to the 18th century. Aristotle addresses some problems that most would recognize as pertaining to economics are mainly as problems concerning how to manage a household. Philosophers addressed ethical questions concerning economic behavior, and they condemned the subject as it gives importance for money. With the increasing importance of trade and of nation-states in the early modern period, ‘mercantilist’ philosophers stressed on the balance of trade and the regulation of the currency. Only in the eighteenth century, the physiocrats, David Hume and especially Adam Smith, came up with the thought that there is a need for laws to be discovered that govern the complex set of interactions that produce and distribute consumption goods and the resources and tools that produce them. Adam Smith’s insight and his contribution in his systematic Inquiry into the Nature and Causes of the Wealth of Nations led to emergence of Economics as an ...
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