Economic is a social science concerned with the production, distribution and consumption of goods & services.
1. Adam Smith ( Father of Modern Economic ) define Economic as –
Ø Economic is a study of Wealth
Ø Known as “Wealth Definition”.
2. Prof. Alfred Marshall define as –
Ø Economic is a study of mankind in the ordinary business of life.
Ø It examine that part of individual and social action which is most closely connected with the attainment and the use of the material requisites of well being.
Ø Known as “Welfare Definition”
3. Lionel Robbins define as –
Ø Economic is a science which studies human behavior as a relationship between ends & scare means which have alternative uses.
Ø Known as “Scarcity Definition”
10 Best Books
Comparison Between Microeconomic & Macroeconomic
Microeconomic | Macroeconomic |
It studies economic problem at an individual level | It studies economic problem at an level of an economy as a whole i.e GDP, Unemployment rate & price indices. |
It determine the output and price for the individual firm. | It determines an aggregate output and general price level in the whole economy. |
Demand and supply are its main tools. | Aggregate demand and aggregate supply are its main tools. |
Its assume all the macro variable to be constant as National income, Consumption, Saving etc. | Its assume all the micro variable to be constant as demand of household, supply of firm, prices of individual product etc. |
THREE ECONOMIC QUESTION
There are three questions every society must answer -
1. What will be produced ?
2. How will it be produced ?
3. For whom will it be produced ?
TYPE OF ECONOMY
Market / Capitalistic Economy | Command / Socialistic Economy | Mixed Economy |
In which individuals and private firms make the major decisions about production and consumption | In which the Government make all the important decisions about production and distribution | Decisions are made by business based on consumer demand however Govt. also makes some decision |
“Laissez-faire” economy | In India | |
In England |
Important Book & Author
1. An Enquiry into the Nature and Causes of the Wealth of Nations – Adam Smith
2. General Theory of Employment, Interest and Money – John Maynard Keynes
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