What is economics?
A social science that studies how people allocate scarce resources to satisfy unlimited wants.
Why is there no single definition of economics?
Because different economists view the subject from different perspectives.
How did J.S. Mill define economics?
As the practical science concerned with the production and distribution of wealth.
How did A.C. Pigou define economics?
As the science of material welfare aimed at improving people's standard of living.
How did H.J. Davenport define economics?
As the study of economic phenomena from the perspective of price and exchange.
How did Alfred Marshall define economics?
As the study of mankind in the ordinary business of life concerning material well-being.
How did Adam Smith define economics?
As an inquiry into the nature and causes of the wealth of nations.
Who is regarded as the father of Economics?
Adam Smith.
How did Lionel Robbins define economics?
As the science that studies human behavior as a relationship between ends and scarce means with alternative uses.
Why is Robbins’ definition widely accepted?
Because it is analytical, scientific, and comprehensive.
Why is economics considered a science?
Because it uses systematic methods, observation, data collection, and testing of theories.
Why is economics considered a social science?
Because it studies human behavior in relation to scarce resources.
List the steps in the scientific method used in economics.
Observation, hypothesis, data collection, analysis, formulation of laws, testing, and prediction.
What are the three basic economic facts identified by Robbins?
Unlimited wants, scarce resources, and alternative uses of resources.
What are the two main branches of economics?
Microeconomics and Macroeconomics.
What is microeconomics?
The study of individual consumers, firms, and industries.
What does microeconomics explain?
How supply and demand determine prices, wages, rent, and profits.
What is macroeconomics?
The study of the economy as a whole.
What issues does macroeconomics examine?
National income, inflation, unemployment, economic growth, exports and imports.
What is a scale of preference?
A list of wants arranged in order of priority.
Why is scale of preference important?
It helps in rational decision-making and proper allocation of resources.
What is opportunity cost?
The value of the next best alternative forgone when a choice is made.
Why is opportunity cost called the real cost?
Because it represents the sacrifice made when choosing one alternative over another.
How does opportunity cost help individuals?
It guides them to make wise choices among competing wants.
How does opportunity cost help firms?
It helps them decide on production techniques and resource allocation.
How does opportunity cost help government?
It assists in preparing budgets and allocating resources efficiently.
What are resources in economics?
Inputs or factors of production used to satisfy human wants.
What are economic resources?
Scarce resources that have opportunity cost.
What are non-economic resources?
Resources that are abundant and have no opportunity cost, like air.
What is a Production Possibility Curve (PPC)?
A curve showing the combinations of two goods that can be produced with given resources and technology.
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