As nouns the difference between scope and nature. is that scope is the breadth, depth, or approach of a subject; a domain while nature is ( lb) the natural world; consisting of all information unaffected by or predating human technology, production and design eg the ecosystem, the natural conditions, virgin ground, unmodified species, laws of nature.
Q.1) Review the key concepts: Wants, scarcity, economic law, normative statement, wealth.
Table of Contents
Answer:
Wants
Want is the desire to have a commodity. Wants and their satisfaction have major roles in all economic activities. According to Seligman, “The starting point of all economic activities is the existence of human wants. This process extends from birth to death.” Life is impossible without some basic needs like food, shelter and clothing. With the advancement of civilization wants are rapidly increased in variety and numbers. The physical and mental constitution of man, his habits and social environments determine the limit of his wants.
Human wants are
- Unlimited
- Recurring
- Competitive
Scarcity
It is said that economics is the science of scarcity and choice. It is true because scarcity lies in the roots of all economic problems.
Basically it means that society’s resources are limited and cannot produce all the goods and services they wish to have.
Scarcity is a universal fact it forces choice and creates conflict.
Economic law
Economic laws are a kind of scientific laws. A law is the establishment of a general truth on the basis of particular observations or experiments which traces out a causal relationship between two or more phenomena. Whereas economic laws are statements of general tendencies or uniformities in the relationships between two or more economic phenomena. Economic law is a generalization of economic behavior of the people which establish relationship between cause and effect in economic matters.
Normative statement
“these statements are based on value judgement.These can vary from person to person.”
Pollution is the most serious economic problemNormative statements are subjective statements and they carry value judgments. For example:
- Unemployment is more harmful than inflation.
Wealth
Adam smith (1723 – 1790), in his book “An Inquiry into Nature and Causes of Wealth of Nations” (1776) defined economics as the science of wealth.
He explained how a nation’s wealth is created. He considered that the individual in the society wants to promote only his own gain and in this, he is led by an “invisible hand” to promote the interests of the society though he has no real intention to promote the society’s interests
Q.2) Explain the definition given by Marshall. On what basis Marshall’s definition is criticised.
Answer:
Adam smith and other writers defined economics as the science of wealth but Marshal came with a different view. He shifted wealth to welfare as the subject matter and defined economics as.
Study of mankind in the ordinary business of life. It inquires how he gets his income and how he uses it. It examines that part of individual and social action, which is most closely connected with the attainment and with the use of material requisites of well-being.
Basic Points
Marshall clarified four basic points about the nature and subject matter of economics.
- Firstly, economics is not to study richness of a few people. It study daily life of ordinary human beings. Its subject matter is human behavior about earning and spending of income.
- Secondly, economics is not a useless study of wealth. It has an aim like analyses and promote material prosperity of people
- Thirdly, the object of study of economics is not wealth but human actions about production and consumptions of goods and services. Wealth is nothing more than just a mean to promote welfare.
- Fourthly, economics is a social science. It is not concerned with the behavior of isolated individuals but the actions of persons living in society who interact and cooperate with each other.
Marshall’s definition is purposeful and comprehensive and it states that instead of wealth promotion of human welfare is the major issue. And it makes economics a social study.
Criticism
Narrow Down the Scope of Economics
According to Robbins when Marshall used the word “Material” in his definition considerably narrows down the scope of economics. There are many things in the world which are immaterial, but they are useful for promoting human welfare. i.e. the services of a doctor teacher, lawyer etc. which satisfy our wants and scarce in number (supply). If we exclude these services and include only material goods then the sphere of economics study will be very much restricted.
Relation between Economics and welfare
The second objection by Robbins is on the establishment of relation between economics and welfare. He says there are many activities which do not promote human welfare, but they are regarded as economic activities (e.g.) the production and sale of alcohol goods or opium, so he says we talk of welfare at all.
Welfare Is a Vague Concept
The third objection is on welfare. He says welfare is vague concept. It is purely subjective. It varies from man to man, place to place and age to age. Robbins says what is the need of the use of such concept which cannot be measured quantitatively and on which two persons cannot agree as what is conductive to welfare and what is not.
It Involves Value Judgment
In this definition the word welfare involves value judgment (what is good and what is bad). According to Robbins, economists are forbidden to pass any judgment.
Impractical
Marshall’s definition is theoretical in nature. It is not possible in practice to divide man’s activities in to material and non-material.
EXCEPTION
Robbins says Marshall’s definition is theoretical, it is not practically applicable because he has divided man’s activity into material and immaterial
Q.3) Multiplicity of wants and scarcity of means are the two foundation stones of economics’ Discuss
Answer:
Unlimited wants and scarce resources
An economic problem is basically the problem of choice which arises because of scarcity of resources. Human wants are unlimited but means to satisfy them are limited. Therefore, all human wants cannot be satisfied with limited means. Wants differ in intensity and limited resources have alternative uses. In such a background, every consumer tries to satisfy his maximum wants. Therefore, one has to choose as to what goods one should consume and in what quantity. Economic problem arises the moment problem of choice arises. Actually speaking, economic problem is basically the problem of choice.
Due to scarcity of resources, the problem which arises before an individual consumer also arises collectively before an economy.
On account of scarcity of resources, an economy has to choose between the following:
- Which goods should be produced and in what quantity?
- What technique should be adopted for production?
- For whom goods should be produced?
These three problems are known as the central problems or the basic problems of an economy. This is so because all other economic problems cluster around these problems. These problems arise in all economies, whether it is socialist economy like that of China or a capitalist economy like that of America.
From the above analysis, it is clear that an economic problem arises because of the following causes:
(i) Human wants are unlimited:
Human wants are unlimited. After the satisfaction of one want, another want arises. Wants are different in intensity. Thus, there is an unending circle of wants, when they arise, are satisfied and arise again.
(ii) Limited resources:
Means are limited for the satisfaction of wants. Scarcity of resources is a relative term for satisfying a particular human want. Resources can be in abundance, but for the satisfaction of all the wants, resources are scarce. This is called relative scarcity of resources where resources are scarce in relation to the wants they are expected to satisfy.
(iii) Alternative uses of resources:
Limited resources can be put to many alternative uses. For example, electricity can be used for domestic light as well as for industrial power.
(iv) Problem of choice:
Human wants are unlimited but resources to satisfy them are limited. This gives rise to the problem of choice, such as what should be produced and how and for whom production should be done. The problem of choice is the economic problem. Had resources also been unlimited like human wants, there would have been no problem of choice and hence no economic problem. In other words, scarcity of resources is the mother of all economic problems. In short, “Multiplicity of wants and scarcity of means are the two foundation stones on which the whole edifice of economic problems stands.
Q.4) Explain Robbins’ definition of Economics.
Answer:
Robbins defined economics as
“Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses”
Robbins gives his own definition of economics after Marshal’s definition and claims that my definition is superior than the earlier definition. It does not suffer from any defect from which earlier definition was suffered. Robbins gives his own definition of economics as “economics is a science which studies human behavior as a relationship between multiple ends and scare resources which have alternative uses”.
To elaborate this definition we explain the following points of the definition.
1. Human wants are unlimited:
Human wants are unlimited which means that the never come to an end. When one want is satisfied another arises and so on. All human beings are always after their wants to satisfy them, but they can never satisfy them. They multiply and sub multiply with the passage of time.
2. Resources are limited:
The resources available for the satisfaction of limited wants are strickly limited. Therefore a consumer must behave rationally while spending the same resource on unlimited wants.
3. Wants are different in priority:
Although human wants are unlimited but they are not equality important. Some of them are more important and some are less important. Therefore a rational consumer should at first satisfy those want which are more important over those which are less important.
4. Alternative use of resources:
The resources are some, but they can be used alternatively. We can put the resource for the fulfillment of so many of our wants. Suppose a student has RS, 100 with this amount of money he can buy a book or pen and so many of other commodities, he cannot buy all those things for TS 100. This means that he can satisfy one want as an alternative to the rest of the other wants.
5. The existence of an economic problem:
The definition of economics given by Robbins highlights the existence of economic problem. This means that an economic problem exists when the above four conditions exist simultaneously i.e. an economic problem exists when human wants are unlimited, they are not t equally important, resources are limited and they are used in alternative ways. Thus we can say that economic problem is the problem of choice and scarcity. If any of these four conditions is not present, economic problem will not exist.
Criticism of Robin’s definition:
1. Economics not a pure science:
Robbins has raised the status of economics as a pure science but infact, it is a social science. It deals with the behavior of human being in social science. In pure science, whatever is stated today will absolutely be true even two centuries later. Two molecules of hydrogen and oxygen will always make water. But as far as human behavior is concerned it keeps on changing with the passage of time. Moreever, there is no laboratory to test the human behavior as physics and chemistry. Thus economics cannot be related with pure science.
2. Too much widened the scope of economics:
Robbin’s definition has widened the scope of economics. This definition helps to study mankind whose status is socially unacceptable like smugglers, corrupt people etc, because they also have unlimited wants and limited resources. As these people don’t bring any welfare to society so in this way it can be said that Robbins has unnecessarily widened the scope of economics
3. Welfare is ignored:
Robbins ignores human welfare and the fact is that we should study all those activities which promote human welfare while ignore those which do not. For instance, according to Robbins, a society can produce anything which is necessary to satisfy human needs. But there is no justification for the production of heroin, alcoholic drink and other goods and services which disrupt the whole social setup.
4. Resource are limited
Robins says the resources of all kind are limited. But in the production sector of the third world countries. We find that human resources in the form of labor are not limited. write this: Robbins says that resources of all kinds are limited. But in the production sector of the third world countries we find that human resources in the form of labor are not limited.
5. Meaningless definition:
Sometimes Robbins’ definitions prove meaningless. The relation between wants and resources does not clear the difference between a resource and a want. For example if a person wants to build a shopping plaza with the help of resourcessuch as bricks, cement and labor etc. Oncethe construction processi s completed and the building is rented, then the same want is converted into a resource for earning the wealth.
Q.5) Compare the views of Robbins & Marshall on e nomics.
Answer:
Marshall’s Definition
“Economics is the study of man in ordinary business of life. It enquires how he gets his income and here he uses it. It examines that part of individual and social action, which is most closely connected with the attainment and with the use of material requisites of well-being. It is the study of wealth on one side and on the other side, which is more important, it is a part of the study of man.”
Robbin’s Definition
“Economics is the science which studies human behavior as a relationship between multiple ends and scarce means, which have alternative uses.”
A comparative study of both the definitions is made on the basis of their similarities and differences.
| Marshall’s definition | Robbins’s definition |
| 1. Marshall’s definition is simple and fair. | 1. This definition is complex. |
| 2. This definition is classificatory as material & non-material, economic & non-economic activities. it means it is devides the subject into classes. | 2. This definition is analytical based on basic economic problems. |
| 3. The objective of this definition is material welfare. | 3. This definition is neutral about the objective. |
| 4. This definition considers economics as asocial science. | 4. This definition considers economics as a human science. |
| 5. Marshall’s definition is based on normative science. | 5. Robbins’s definition is based on the concept of positive science. |
| 6. Economics is related with ordinary man. | 6. Economics is related with both ordinary and extra ordinary man. |
(a) SIMILARITIES
1. Human behavior:
Both the definitions are concerned with human behavior.
2. Optimization:
Both the definitions concentrate on optimization i.e. the best possible situation within given conditions. In Marshall’s definition, our aim is to maximize material welfare while Robbin’s definition is concerned with maximization of satisfaction.
3. Basic pillars:
Consumption, production, exchange and distribution of wealth are the basic pillars of both the definitions.
4. Same characteristics of wealth and scarce resources:
According to Marshall, wealth is the basic source of maximization of material welfare. Robbins is of the opinion that we maximize our satisfaction by scarce resources. Both the concepts of wealth and scarce resources are synonymous as both have the same characteristics, i.e. utility, transferability and scarcity.
5. Analytical:
Marshall’s definition is based on the attainment and use of material requisites. Robbin’s definition is based on the problem of choice. Hence both the definitions are analytical in nature.
(b) DIFFERENCES
We observe the following dissimilarities between the two definitions.
1. Economic activity – material / immaterial:
· Marshall believes in only material activities which promote material welfare.
· Robbins believes in both material and immaterial activities to tackle the problem of choice.
2. Social science / natural science:
- For Marshall, Economics is a social science.
- On the other hands, Robbins is of the view that Economics is natural science like Physics, Chemistry etc.
3. Normative science / positive science:
- Marshall is of the opinion that in Economics, we not only consider the problems as they are but we also suggest that how the given problem should be tackled. It means according to Marshall, Economics is basically a normative science.
- Robbins thinks otherwise. He says that economists must be just neutral observers of economic events around them, ignoring their personal likings. They can talk of facts only. Hence Robbins believes that Economics is basically a positive science in which the economists describe the economics facts as they are.
4. Classification / universality:
- Marshall has classified the goods into material / non-material and Individuals into social / isolated.
- Robbins does not believe in such artificial classification. He has analyzed economic problem which appears due to multiple wants and scarce means. It is a universal phenomenon.
5. Practical / theoretical:
- Marshall’s definition is practical in nature.It is useful for economic policies.
- Robbins definition is theoretical in nature.
6. Social / isolated individual:
- Marshall considers only the activities of a social person. It ignores the activities of an isolated person.
- Robbins considers activities of both the persons, i.e. activities of a social person and activities of an isolated person.
7. Appreciable / non-appreciable activities:
· Marshall considers only appreciable activities of a social person.
· Robbins considers both appreciable and inappreciable activities of both the social person and isolated person.
8. Human touch:
· Marshall concentrates on human material welfare. He gives due importance to man.
· Robbins focuses on scarcity of resources. He gives no importance of man.
9. Welfare / scarcity:
· Marshall’s definition is based on the concept of human material welfare.
· Robbins’s definition is based on the concept of scarcity of resources.
10. Scope of Economics:
· Marshall considers only material aspects of human welfare. It reflects limited scope of Economics.
· Robbins makes no difference between material and non-material aspects. It indicates wider scope of Economics.
11. Moral values:
· Marshall’s definition makes a direct link of economic activities with moral values.
· Robbins definition has nothing to do with moral or ethical values. It is the problem of social reformers, politicians etc.
12. Subjective / objective:
· The concept of welfare in Marshall’s definition is subjective and it varies from person to person and place to place.
· The concept of scarcity in Robbins’ definition is objective and applicable equally to every person or to every place.
13. Qualitative / quantitative:
· The concept of welfare is a qualitative phenomenon in Marshall’s definition and we cannot measure it.
· The concept of scarcity is a quantitative phenomenon in Robbin’s definition and we can measure it.
14. Cause / effect:
· In Marshall’s definition, major concern is of material welfare which is the effect of economic development.
· Robbins definition is primarily concerned with allocation of scarce resources which is the cause of economic development.
15. Vague / clear:
· The pivot of Marshall’s definition is welfare which is a vague concept and its Indicates change with the passage of time.
· Robbins definitions is based on a clear concept of scarcity and its basic indicator, i.e. excess demand sustains.
16. Macro / micro approach:
· In Marshall’s definition, material welfare is a macro phenomenon.
· In Robbins definition, major macro problems like unemployment, inflation etc. have not been considered. It concentrates only on micro aspects of economic activities.
CONCLUSION
On the basis of above-mentioned facts, it is concluded that though Marshall’s definition of Economics has a remarkable status in economic literature, yet Robbin’s definition is logically better. That is why modern economists own it and prefer it to classical and neo-classical definition of Economics.
Q.6) Economics is basically a study of wealth. Explain
Answer:
ECONOMICS AS SCIENCE OF WEALTH:
Classical View Adam Smith is the pioneer classical economist and is considered the founder of modern economics. Adam Smith considered that ‘Economics is a science of wealth.’ In 1776 I named his book on economics as “An Inquiry into the Nature and Causes of the Wealth of Nations.
Evaluation:
The classical definitions given by Adam Smith and others had one common feature; that ‘wealth is the center of the study of economics’. Adam Smith mentioned four aspects of wealth which form the basis of the study of economics; Production of wealth, consumption of wealth, distribution of wealth and exchange of wealth. This overstresses on wealth caused misunderstanding and a negative view of economics developed that it ignores higher human values. Since wealth was viewed only as richness, stocks of gold and money, it was assumed that the study of economics would encourage selfishness and greediness. During the same period, theories like Malthus’ population theory and the law of diminishing returns were put forward which convinced people that economists preached pessimism and a dark future for mankind. They called it a “Dismal Science”
If we deeply study, we find that the criticism against this definition in terms of | wealth is unjustified. It was only due to a misunderstanding about the real meaning of wealth. Wealth is not only money and gold, but all scarce goods and services we need and use. Wealth in this meaning is not bad in itself. Moreover, there is nothing in economic studies that promotes selfishness. In fact, the real objection against this definition is that it is too wide. Economics does not study every aspect of wealth. For example, it has nothing to do with the role of an engineer in the production of wealth.
Q.7) What is Economic Problem? Discuss in the light of Robbins definition of economics.
Answer:
Economic problem, in essence, is the problem of scarcity of resources in comparison with human wants.
In our everyday life we encounter so many economic problems like
- Unemployment
- Poverty
- Inflation.
But if we analyze all these problems than we will analyze that the basic root for all these problems is the scarcity of resources.
Now according to Robbins,
“Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses”
Basis of economic problem
Robbins definition highlights the basis of economic problem. He gave four fundamental points of human life that create this problem.
1. Ends (want) are unlimited: everybody knows that the large number of our wants are left unsatisfied. What one can do is to try to increase the resources and then use them in best possible way.
2. End or wants are of unequal importance: people can arrange their wants in an order of preference so that most urgent wants can be satisfied first.
3. Means are scarce: goods are not produced by magic lamps but by resources and the resources are limited as compare to the limitless wants. Resources are always insufficient.
4. Means have alternative uses: a piece of land may be used to grow crops, build a building or to have playground. Similarly the given amount of money can also be used for alternative options. So resources must be used to satisfy maximum wants.
According to Robbins the above mentioned facts give rise to the economic problem and provide basis to define economics.
Q.8) What are Economic laws? Discuss their characteristics.
Answer:
Economic laws are a kind of scientific laws. A law is the establishment of a general truth on the basis of particular observations or experiments which traces out a causal relationship between two or more phenomena. Whereas economic laws are statements of general tendencies or uniformities in the relationships between two or more economic phenomena.
Economic law is a generalization of economic behavior of the people which establishes relationship between some cause and its effect in economic matters
Characteristics/ features
In simple words economic laws are the generalizations based on some particular situation. They are useful guide to understand economic events and are not immediately applicable to policy.
1) ECONOMIC LAWS ARE CONDITIONAL: That is why, at the end of the statement of each economic law it is always state that “all other factors remain constant”. For example, according to the law of demand “a rise the price of a commodity or service is followed by a reduction in demand and a fall in price is followed by an increase in demand if all other things remain constant”. The factor to remain constant here are income of the consumer, state, fashion and prices of substitutes and complementary goods. If these things change, law of demand will not prove to be true. For example we see that income of a consumer does not remain constant. Instead it goes up. Therefore, with an increase in income, a rise in the price of a commodity will not be followed by a reduction in qualtity demanded and law of demand will not hold. Thus, for their validity all economic laws are always linked up with certain conditions.
(2) ECONOMIC CONDITION: A change in the economic, political and social environment of a country can bring a change in the application of economic laws. For example, economic situation of a country depend upon the forces of demand and supply which keep on changing with the passage of time due to change in fashion, habits and taste of the people. Hence, we can say there is always a possibility that law of demand will operate, but are never sure and definite about its application. Contrary to it, laws of physical sciences definitely apply in all situation. For example H2O will definitely make water. Thus, economic laws lack exactitude and definiteness. According to Marshall, economic laws are uncertain unlike the simple laws of gravitation.
(3)THEY LACK IN PREDICTABILTY: As mentioned earlier economic laws depend upon assumption or “other factors being equal”. But it is very difficult to keep all other constant in a free social life. Hence, economic laws lack predictability. They are as unpredictable as earth quakes and vice-versa, other things to remain constant i.e. production technique and cost of production. But it is hard to keep these factors constant. Therefore, it is not possible to predict a prospective change in supply in response to change in price.
(4) THEY ARE QUALITATIVE AND NOT QUANTITATIVE: Economic laws are qualitative and not quantitative in nature. For example in the case of law of demand, we say that a fall in the price of a productive result in an increase in the demand of the product. But we cannot say that a fall in the price of a product by 50% will result in an increase in the demand of the product by 50%. Hence economic laws are expressed in qualitative terms.
(5) THEY ARE STATEMENT OF TENDENCIES: Economics laws represents economic tendencies of the people in general. Therefore they are merely statement of tendencies or statistical probabilities. Take the case of law of diminishing marginal utility. All of us experience in every day life that the second glass of water gives us less utility/satisfaction than the first one and so on. This general tendency on the part of the people enable economists to make law of diminishing marginal utility. Hence economic laws are simply statements of general economic tendencies.
Q.9) How economic laws differ from laws of physical and social sciences?
Answer:
Economic laws and laws of physical sciences
Similarities
1. Both are the result of systematic study.
2. Both show relationship between cause and effect.
3. Both are based on some assumptions and conditions.
Differences
1. Economics is a social science. Its laws deal with the behavior of living human beings. Because human behavior is a changing phenomenon so economic laws are not exact. Physical sciences deals with non-living matter. their laws are exact and defined
2. Economic problems are caused by a large number of factors.We can asssume that some factors do not change during the study of the problem but they can change because of human nature.This makes it less reliable
3. Controlled experiments in laboratories are a common thing in natural sciences. To test their laws, it is easy to make other things equal by controlling and isolating the effects of some factors.But an economist does not have such facilities so we have to assume as his laboratory is the real, changing world
4. On the basis of laws of natural sciences, it is possible to directly predict the outcomes of a situation.In economics it’s different because we cant predict that 10% change in price would bring how much change in quantity demanded.
Economic laws and the laws of other social sciences
Social science means subject such as history, political science psychology etc. These sciences have the common features and similarities. In economics they also study human behavior and formulate general principles to describe different situations so their laws resemble of those in social sciences in many aspects. However while formulating laws economists are in better position and face with less confusion as compared to the historians or sociologists.
Factors involved in their study are difficult to identify and measure since they change frequently. On the other hand laws of economics are more exact and accurate. In terms of money, the economists can quantitatively measure, directly or indirectly, many of the factors under consideration.
Another serious problem which makes laws of those sciences less reliable than economic laws is the fact that personal biases and short comings affect the outlook of researcher in history, political science etc., are more in economics.
Q.10) Write note on microeconomics and macroeconomics. Comment on their relative importance.
Answer:
Microeconomics is concerned with
· Supply and demand in individual markets
· Individual consumer behavior. e.g. consumer choice theory
· Individual labor markets – e.g. demand for labor, wager determination
· Externalities arising from production and consumption.
Microeconomics:
The word “Micro” has been derived from a Greek word “Mikros” which means millions of parts. Microeconomics is a discussion about individual parts of the whole economy. Microeconomics is also called price theory.
Microeconomics is the study of decisions that people and businesses make regarding the allocation of resources and prices of goods and services. This means also taking into account taxes and regulations imposed by governments are also included. Microeconomics focuses on supply and demand and other forces that determine the price levels seen in the economy. For example, microeconomics would tell us how a specific company could maximize its production and capacity so it could lower its prices and it can compete better in its industry.
According to the famous economists Henderson
“Microeconomics is the study of the economic actions of individuals and well defined groups of individuals.”
In the words of Boulding
“Microeconomics is the study of particular firms, particular households, individual prices, wages, incomes, individual industries, particular commodities.”
Macroeconomics is concerned with
· Monetary / fiscal policy. E.g. what effect of interest rates on an economy
· Reasons for inflation, and unemployment
· Economic Growth
· International trade and globalization
· Reasons for differences in living standards and economic growth between countries.
· Government borrowing
Macroeconomics:
The word “Macro” is derived from a Greek word “Makros” which means large. Macroeconomics is concerned with aggregates and averages of the entire economy, such as national income, savings and investments, aggregate demand and supply etc.
In K.E Boulding words
“Macroeconomics deals not with individual quantities but with aggregates of these quantities, not with individual incomes but with national income, not with individual price but with price level, not with individual output but with national output.”
Macroeconomics is the income theory that explains the level of total production and the reason of its rises and falls. Macroeconomics is the field of economics that studies the behavior of the economy as a whole and not just on specific companies, but entire industries and economies.
Relative importance
The division between microeconomics and macroeconomics is just for the convenience to study economic problems. To have better understanding of its working, both the approaches have their draw backs and merits. Moreover the approaches are complementary rather than competitive. They cannot be completely separated.
Q.11) Discuss utility of study of economics
Answer:
Utility of study of economics
Just as the world has experienced scientific revolution during past few centuries, economics has undergone very rapid expansion. Successful application of its principles has caused revolutionary changes in the living standard of many nations. An optimistic view is that the time is not far away when the human race will overcome the chronic problems of hunger, disease and poverty. Thus, there is a craze among people to study economics. The important fact is that no other subject has as large enrollment of students as found in economics. Individuals, societies and nations are vigorously competing to excel in the economics. Struggle for supremacy in the world has shifted from political to economic fields.
Educational value
1. It gives good training for systematic and clear thinking It disciplines people in logical reasoning. It teaches us how to make conclusions from observations of daily life.
2. Economics provides useful information on matters related to daily life. A person cannot be called educated unless he has some understanding about economic events around him.
3. Helps in study of other subjects: events of history or sociology and progress of human civilization cannot be understood without identifying economic forces working in society. Politics and economy always go hand in hand.
Practical value
Economics also has many practical uses
1. Solution of economic problem: Problems like unemployment rising prices etc., need economic knowledge to solve them
2. Success in business is linked to good understanding of markets and the way it works, prices trends in demand, exchange rates and government economic prices.
3. Guide for labor and employers Both can benefit from the study of economics. Workers can learn how to justify their demand for higher wages. employers can get a better understanding of thir responsibilities and duties.
4. Money banking and finance issues are a specialized branch of economics.
5. Guide consumers to make best use of limited income
6. Good governance: Economic factors are the root cause of many poitical and social problems. There is an increased chance of success if our politicians and rulers know about economics.
7. Guidance for finance minister who must have the economic knowledge to know the impact of government expenditures or taxes on various sections of an economy.
8. Economic planning is not possible without sound knowledge of economics
9. Common citizens: A modern progressive country needs citizens who know the impact of government policies on various sectors of the economy.
10. Employment opportunities are improved for a person having s degree in economics. This is the reason more and more people are taking courses like b.com and MBA.
Special importance for developing countries
Developing countries like India where poverty and unemployment are widely spread. people don’t even get the basic necessities of life. Study of economics explains us the basic reason for such problems.
