Economic Principles by Paul.A.Samuelson

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Questions and Answers

What does the modern definition of economy combine?

Supply and demand

National income and resources

Welfare and scarcity (correct)

Scarcity and distribution

According to Paul.A.Samuelson’s (1948) definition, what is the study of economy focused on?

How people and society make choices to utilize scarce resources (correct)

How to distribute goods and services

Analyzing macroeconomic concepts

National income and resources

Which statement accurately describes scarcity?

Scarcity means a small amount of something is available

Scarcity results from abundance of resources

In the context of economics, scarce things must be limited and wanted (correct)

Scarcity implies an unlimited availability of resources

What is the role of governments in addressing scarcity?

Governments aim to reduce scarcity and improve living standards Signup and view all the answers

In economics, what are goods and services, respectively?

Tangible and intangible, respectively Signup and view all the answers

What economic assumptions contribute to the problem of scarcity?

Unlimited wants and scarce goods and services Signup and view all the answers

What characterizes Lionel Robbin’s definition of Economy?

It focuses on the efficient use of resources. Signup and view all the answers

According to Alfred Marshall and Lionel Robbin's definitions, which aspect is a significant factor in the study of economy?

Scarcity of resources Signup and view all the answers

Which concept is NOT examined by Lionel Robbin's definition of Economy?

Social well-being of individuals Signup and view all the answers

In what way does Lionel Robbin's definition differ from Alfred Marshall's definition?

It analyzes modern microeconomic theory. Signup and view all the answers

What is a significant concept that Lionel Robbin's definition emphasizes in the study of economy?

Alternative uses of scarce resources Signup and view all the answers

Which topic is left out of Lionel Robbin's definition of Economy, making it a limitation according to the text?

Social choice and interaction theory Signup and view all the answers

What does Maslow's theory of needs state about the satisfaction of needs in different categories?

Lower-order needs must be satisfied before higher-order needs. Signup and view all the answers

Which aspect is a limitation of Adam Smith's definition of economy?

Views wealth as a stock of goods only. Signup and view all the answers

What is the main drawback of overemphasizing the material aspects of well-being in economic theory?

Ignores resource scarcity as a central analysis topic. Signup and view all the answers

What is the central objective of studying Adam Smith's definition of the economy?

Investigating production, distribution, and consumption of wealth. Signup and view all the answers

Which significant concept is absent in Adam Smith's definition of economy?

Focus on non-wealth aspects of human existence. Signup and view all the answers

Study Notes

Definitions of Economy

Paul A. Samuelson's (1948) definition: Economy is the study of how people and society choose to employ scarce productive resources to produce various commodities over time and distribute them for consumption now and in the future among various persons and groups of society.

Scarcity

Scarcity does not mean that only a little of something is available, but rather that the resource is limited and wanted.
Goods are tangible things that satisfy our wants, while services are intangible things that satisfy our wants.
Economic assumptions: • Humans have unlimited wants. • Goods and services are scarce. • As a result of unlimited wants, scarcity can't be eliminated, but it can be reduced by making the right choices.

Alfred Marshall's (1890) Definition

Marshall's definition is known as the Welfare Definition.
It includes the study of man in the ordinary business of life, examining how a person gets his income and how he invests it.
Welfare is the social effort to promote the basic physical and material wellbeing of people in need.
Limitations of this definition: • It ignores the problem of scarce resources with unlimited potential uses. • It analyzes the material aspects of human welfare and ignores non-material aspects. • It does not provide a clear link between the acquisition of wealth and welfare.

Lionel Robbins' (1932) Definition

Robbins' definition is known as the Scarcity Definition.
It studies human behavior as a relationship between ends and scarce means with alternative uses.
Scarcity states that the society has insufficient resources to fulfill all human wants and needs.
This definition requires the efficient use of resources for optimization.

Maslow's Hierarchy of Needs

Maslow's hierarchy indicates that individuals must satisfy lower-order needs before they can satisfy higher-order needs.
Lower-order needs include physiological and safety needs, while higher-order needs include social, esteem, and self-actualization needs.
Maslow's theory allows us to see different levels of economy in a specific order.

Adam Smith's (1776) Definition

Smith's definition is known as the Wealth Definition.
It deals with the production, distribution, and consumption of wealth.
Wealth is the stock of goods existing at a given time that have a money value.
Limitations of this definition: • It ignores all non-wealth aspects of human existence. • It over-emphasizes the material aspects of well-being and ignores non-material aspects. • It assumes that human beings act as rational economic agents who mindlessly strive to maximize their own well-being.

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Description

Explore the economic principles introduced by Paul.A.Samuelson in 1948, focusing on the study of individual actions using mathematical models. Learn about the definition of growth and how scarce resources are allocated to produce commodities for both present and future consumption.