Business Economics
1. INTRODUCTION
Economics was formerly called political economy. The term Political economy
means the management of the wealth of the state. “Adam Smith, the father of modem
Economics, in his book entitled 'An Enquiry into the Nature and Causes of the Wealth of
Nations’ (Published in 1776) defined Economics as a study of wealth. Smith considered
the acquisition of wealth as the main objective of human activity. According to him the
subject matter of Economics is the study of how wealth is produced and consumed.
Smith's definition is known as wealth definition.
According to Wikipedia, "Economics is a social science that studies the production, distribution, and consumption of scarce goods and services.
"Economics is a study of mankind in the ordinary business of life. It examines
that part of individual and social action which is most closely connected with the
attainment and with the use of the material requisites of well-being. Thus, it is on the one
side a study of wealth and on the other and more important side a part of the study of the
man", Alfred Marshall
NATURE OF ECONOMICS
(a) Economics is a science: A subject is considered science if it is a systematised body of knowledge which studies the relationship between cause and effect.It is capable of measurement.It has its own methodological apparatus.It should have the ability to forecast.If we analyse Economics, we find that it has all the features of science. To understand, let us take the law of demand. It explains the cause and effect relationshipbetween price and demand for a commodity. It says, given other things constant, as pricerises, the demand for a commodity falls and vice versa. Here the cause is price and the effect is fall in quantity demanded.
b) Economics is an art: Art is nothing but practice of knowledge. Whereas science teaches us to know art teaches us to do. Unlike science which is theoretical, art ispractical. If we analyse Economics, we find that it has the features of an art also. Its various branches, consumption, production, public finance, etc. provide practical solutions to various economic problems. It helps in solving various economic problems
which we face in our day-to-day life.
1. INTRODUCTION
Economics was formerly called political economy. The term Political economy
means the management of the wealth of the state. “Adam Smith, the father of modem
Economics, in his book entitled 'An Enquiry into the Nature and Causes of the Wealth of
Nations’ (Published in 1776) defined Economics as a study of wealth. Smith considered
the acquisition of wealth as the main objective of human activity. According to him the
subject matter of Economics is the study of how wealth is produced and consumed.
Smith's definition is known as wealth definition.
According to Wikipedia, "Economics is a social science that studies the production, distribution, and consumption of scarce goods and services.
"Economics is a study of mankind in the ordinary business of life. It examines
that part of individual and social action which is most closely connected with the
attainment and with the use of the material requisites of well-being. Thus, it is on the one
side a study of wealth and on the other and more important side a part of the study of the
man", Alfred Marshall
NATURE OF ECONOMICS
(a) Economics is a science: A subject is considered science if it is a systematised body of knowledge which studies the relationship between cause and effect.It is capable of measurement.It has its own methodological apparatus.It should have the ability to forecast.If we analyse Economics, we find that it has all the features of science. To understand, let us take the law of demand. It explains the cause and effect relationshipbetween price and demand for a commodity. It says, given other things constant, as pricerises, the demand for a commodity falls and vice versa. Here the cause is price and the effect is fall in quantity demanded.
b) Economics is an art: Art is nothing but practice of knowledge. Whereas science teaches us to know art teaches us to do. Unlike science which is theoretical, art ispractical. If we analyse Economics, we find that it has the features of an art also. Its various branches, consumption, production, public finance, etc. provide practical solutions to various economic problems. It helps in solving various economic problems
which we face in our day-to-day life.
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