Meaning ,Nature and scope of economics.
Meaning ,
Economics is that branch of social science which is concerned with the study of how individuals, households, firms, industries and government take decision relating to the allocation of limited resources to productive uses, so as to derive maximum gain or satisfaction.
Simply put, it is all about the choices we make concerning the use of scarce resources that have alternative uses, with the aim of satisfying our most pressing infinite wants and distribute it among ourselves.
Nature of Economics,
Economics is a science: Science is an organised branch of knowledge, that analyses cause and effect relationship between economic agents.
{1 } Economics helps in integrating various sciences such as mathematics, statistics, etc. to identify the relationship between price, demand, supply and other economic factors.
{2 }Positive Economics: A positive science is one that studies the relationship between two variables but does not give any value judgment, i.e. it states ‘what is’. It deals with the facts about the entire economy.
{3}Normative Economics: As a normative science, economics passes value judgement, i.e. ‘what ought to be’. It is concerned with economic goals and policies to attain these goals.
{4}Economics is an art: Art is a discipline that expresses the way things are to be done, so as to achieve the desired end. Economics has various branches like production, distribution, consumption and economics, that provide general rules and laws that are capable of solving different problems of the society.
Therefore, economics is considered as science as well as art, i.e. science in terms of its methodology and arts as in application. Hence, economics is concerned with both theoretical and practical aspects of the economic problems which we encounter in our day to day life.
SCOPE OF ECONOMICS .
‘Scope’ means the sphere of study. We have to consider what economics studies and what lies beyond it. The scope of economics will be brought out by discussing the following.
a) Subject – matter of economics.
b) Economics is a social science
c) Whether Economics is a science or an art?
d) If Economics is science, whether it is positive science or a normative science?
a) Subject – matter of economics: Economics studies man’s life and work, not the whele of it, but only one aspect of it. It does not study how a person is born, how he grows up and dies, how human body is made up and functions, all these are concerned with biological sciences, Similarly Economics is also not concerned with how a person thinks and the human organizations being these are a matter of psychology and political science. Economics only tells us how a man utilizes his limited resources for the satisfaction of his unlimited wants, a man has limited amount of money and time, but his wants are unlimited. He must so spend the money and time he has that he derives maximum satisfaction. This is the subject matter of Economics.
Economic Activity: It we look around, we see the farmer tilling his field, a worker is working in factory, a Doctor attending the patients, a teacher teaching his students and so on. They are all engaged in what is called “Economic Activity”. They earn money and purchase goods. Neither money nor goods is an end in itself. They are needed for the satisfaction of human wants and to promote human welfare.
To fulfill the wants a man is taking efforts. Efforts lead to satisfaction. Thus wants- Efforts-Satisfaction sums up the subject matter of economics.
b) Economics is a social Science: In primitive society, the connection between wants efforts and satisfaction is close and direct. But in a modern Society things are not so simple and straight. Here man produces what he does not consume and consumes what he does not produce. When he produces more, he has to sell the excess quantity. Similarly he has to buy a product which is not produced by him. Thus the process of buying and selling which is called as Exchange comes in between wants efforts and satisfaction.
Nowadays, most of the things we need are made in factories. To make them the worker gives his labour, the land lord his land, the capitalist his capital, while the businessman organizes the work of all these. They all get reward in money. The labourer earns wages, the landlord gets rent the capitalist earns interest, while the entrepreneur’s (Businessman) reward is profit. Economics studies how these income—wages, rent interest and profits-are determined. This process in called “Distribution: This also comes in between efforts and satisfaction.
Thus we can say that the subject-matter of Economics is
Consumption- the satisfaction of wants.
Production- i.e. producing things, making an effort to satisfy our wants
Exchange- its mechanism, money, credit, banking etc.
Distribution – sharing of all that is produced in the country. In addition, Economics also studies “Public Finance”
Macro Economics – When we study how income and employment is generated and how the level of country’s income and employment is determined, at aggregated level, it is a matter of macro-economics. Thus national income, output, employment, general price level economic growth etc. are the subject matter of macro Economics.
Micro-Economic – When economics is studied at individual level i.e. consumer’s behavior, producer’s behavior, and price theory etc it is a matter of micro-economics.
c) Economics, a Science or an Art? Broadly different subjects can be classified as science subjects and Arts subjects, Science subjects groups includes physics, Chemistry, Biology etc while Arts group includes History, civics, sociology Languages etc. Whether Economics is a science or an art? Let us first understand what is terms ‘science’ and ‘arts’ really means.
A science is a systematized body of knowledge. A branch of knowledge becomes systematized when relevant facts hove been collected and analyzed in a manner that we can trace the effects back to their and project cases forward to their effects. In other words laws have been discovered explaining facts, it becomes a science, In Economics also many laws and principles have been discovered and hence it is treated as a science. An art lays down formulae to guide people who want to achieve a certain aim. In this angle also Economics guides the people to achieve aims, e.g. aim like removal poverty, more production etc. Thus Economics is an art also. In short Economics is both science as well as art also.
d) Economics whether positive or normative science: A positive science explains ''why" and "wherefore" of things. i.e. causes and effects and normative science on the other hand rightness or wrongness of the things. In view of this, Economics is both a positive and. normative science. It not only tells us why certain things happen, it also says whether it is right or wrong the thing to happen. For example, in the world few people are very rich while the masses are very poor. Economics should and can explain not only the causes of this unequal distribution of wealth, but it should also say whether this is good or bad. It might well say that wealth ought to be fairly distributed. Further it should suggest the methods of doing it.
Economics is that branch of social science which is concerned with the study of how individuals, households, firms, industries and government take decision relating to the allocation of limited resources to productive uses, so as to derive maximum gain or satisfaction.
Simply put, it is all about the choices we make concerning the use of scarce resources that have alternative uses, with the aim of satisfying our most pressing infinite wants and distribute it among ourselves.
Nature of Economics,
Economics is a science: Science is an organised branch of knowledge, that analyses cause and effect relationship between economic agents.
{1 } Economics helps in integrating various sciences such as mathematics, statistics, etc. to identify the relationship between price, demand, supply and other economic factors.
{2 }Positive Economics: A positive science is one that studies the relationship between two variables but does not give any value judgment, i.e. it states ‘what is’. It deals with the facts about the entire economy.
{3}Normative Economics: As a normative science, economics passes value judgement, i.e. ‘what ought to be’. It is concerned with economic goals and policies to attain these goals.
{4}Economics is an art: Art is a discipline that expresses the way things are to be done, so as to achieve the desired end. Economics has various branches like production, distribution, consumption and economics, that provide general rules and laws that are capable of solving different problems of the society.
Therefore, economics is considered as science as well as art, i.e. science in terms of its methodology and arts as in application. Hence, economics is concerned with both theoretical and practical aspects of the economic problems which we encounter in our day to day life.
SCOPE OF ECONOMICS .
‘Scope’ means the sphere of study. We have to consider what economics studies and what lies beyond it. The scope of economics will be brought out by discussing the following.
a) Subject – matter of economics.
b) Economics is a social science
c) Whether Economics is a science or an art?
d) If Economics is science, whether it is positive science or a normative science?
a) Subject – matter of economics: Economics studies man’s life and work, not the whele of it, but only one aspect of it. It does not study how a person is born, how he grows up and dies, how human body is made up and functions, all these are concerned with biological sciences, Similarly Economics is also not concerned with how a person thinks and the human organizations being these are a matter of psychology and political science. Economics only tells us how a man utilizes his limited resources for the satisfaction of his unlimited wants, a man has limited amount of money and time, but his wants are unlimited. He must so spend the money and time he has that he derives maximum satisfaction. This is the subject matter of Economics.
Economic Activity: It we look around, we see the farmer tilling his field, a worker is working in factory, a Doctor attending the patients, a teacher teaching his students and so on. They are all engaged in what is called “Economic Activity”. They earn money and purchase goods. Neither money nor goods is an end in itself. They are needed for the satisfaction of human wants and to promote human welfare.
To fulfill the wants a man is taking efforts. Efforts lead to satisfaction. Thus wants- Efforts-Satisfaction sums up the subject matter of economics.
b) Economics is a social Science: In primitive society, the connection between wants efforts and satisfaction is close and direct. But in a modern Society things are not so simple and straight. Here man produces what he does not consume and consumes what he does not produce. When he produces more, he has to sell the excess quantity. Similarly he has to buy a product which is not produced by him. Thus the process of buying and selling which is called as Exchange comes in between wants efforts and satisfaction.
Nowadays, most of the things we need are made in factories. To make them the worker gives his labour, the land lord his land, the capitalist his capital, while the businessman organizes the work of all these. They all get reward in money. The labourer earns wages, the landlord gets rent the capitalist earns interest, while the entrepreneur’s (Businessman) reward is profit. Economics studies how these income—wages, rent interest and profits-are determined. This process in called “Distribution: This also comes in between efforts and satisfaction.
Thus we can say that the subject-matter of Economics is
Consumption- the satisfaction of wants.
Production- i.e. producing things, making an effort to satisfy our wants
Exchange- its mechanism, money, credit, banking etc.
Distribution – sharing of all that is produced in the country. In addition, Economics also studies “Public Finance”
Macro Economics – When we study how income and employment is generated and how the level of country’s income and employment is determined, at aggregated level, it is a matter of macro-economics. Thus national income, output, employment, general price level economic growth etc. are the subject matter of macro Economics.
Micro-Economic – When economics is studied at individual level i.e. consumer’s behavior, producer’s behavior, and price theory etc it is a matter of micro-economics.
c) Economics, a Science or an Art? Broadly different subjects can be classified as science subjects and Arts subjects, Science subjects groups includes physics, Chemistry, Biology etc while Arts group includes History, civics, sociology Languages etc. Whether Economics is a science or an art? Let us first understand what is terms ‘science’ and ‘arts’ really means.
A science is a systematized body of knowledge. A branch of knowledge becomes systematized when relevant facts hove been collected and analyzed in a manner that we can trace the effects back to their and project cases forward to their effects. In other words laws have been discovered explaining facts, it becomes a science, In Economics also many laws and principles have been discovered and hence it is treated as a science. An art lays down formulae to guide people who want to achieve a certain aim. In this angle also Economics guides the people to achieve aims, e.g. aim like removal poverty, more production etc. Thus Economics is an art also. In short Economics is both science as well as art also.
d) Economics whether positive or normative science: A positive science explains ''why" and "wherefore" of things. i.e. causes and effects and normative science on the other hand rightness or wrongness of the things. In view of this, Economics is both a positive and. normative science. It not only tells us why certain things happen, it also says whether it is right or wrong the thing to happen. For example, in the world few people are very rich while the masses are very poor. Economics should and can explain not only the causes of this unequal distribution of wealth, but it should also say whether this is good or bad. It might well say that wealth ought to be fairly distributed. Further it should suggest the methods of doing it.
Here is another article => Scope and Subject of Economics
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