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What is Economics | Educational Lighthouse

What is Economics?

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Economics is the study of choice & scarcity of human life. In this world, resources are scarce. That’s why we have to choose the more demandable goods upon others. Natural Resources – Inputs (Land, Labour, and Capital) used to produce goods and services. According to Professor Benham, ‘‘Economic problem arises because people are compelled to choose.’’

Professors and Economists outlook:

  1. ‘‘Economics is the science of wealth’’ – “An Inquiry into the Nature and Causes of the Wealth of Nations – Adam Smith’’
  2. ‘‘Economics is the study of mankind in the ordinary business of life.” – Alfred Marshall’’
  3. ‘‘Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses’’ – ‘‘The Nature and Significance of Economic Science – Lionel Robbins’’
  4. ‘‘Economics is the study of how men and society choose, with or without the use of money, to employ scarce productive resources to produce various commodities over time and distribute them for consumption, now or in future, among various people and group in the society.’’ – ‘‘Economics – P. A. Samuelson’’
  5. ‘‘Economics is fundamentally a study of scarcity and the problem to which scarcity gives rise.’’ – ‘‘A Text Book of Economic Theory – W. C. Stonier & D. C. Hague’’

As an example – Suppose,

  1. Needs: Our needs are Food; Newspaper and Cloth.
  2. Price: The Price of Food is $6; Newspaper is $3 and Cloth is $4.
  3. Resource: We have $10 as our resource which is limited in amount. With this limited amount of money, we have to fulfill our most important needs.

Presentation on Table

Product Name

PriceChoiceDemand/Importance
Food
$6
1
Most Important Product (***)
Newspaper
$3
3
Less Important Product (*)
Cloth
$4
2
Important Product (**)
Total$15 

 

  1. Choice: We all know that food is more important than anything else for human sustainability. That’s why we choose & buy food 1st upon other needs. After buying the food we have ($10 – $6) = $4. Here we can spend this 4 dollar to buy the newspaper or the cloth. If we buy the newspaper then we have to sacrifice the cloth. Now we select/choose one product which is more important to us that is cloth. Because without newspaper we can live but without cloth, we can’t. So, we’ll buy the cloth and sacrifice the newspaper for our limited wealth/resource of scarcity.

Therefore, Economics is a social science which is study human behavior in their economic situations and how people use scarce resources to produce goods and distribute them among different people.

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