Economics Definition Quiz

Definition of Economics

• Economics is a social science that studies human wants in relation to scarce resources having alternate uses and their rational management to maximize economic welfare.
• It is concerned with the production, distribution, and consumption of goods and services to maximize economic welfare.

Wealth Definition of Economics

• Adam Smith defined economics as "an inquiry into the factors that determine the wealth of a country and its growth".
• In economics, wealth refers to goods that satisfy human wants, not just money.

Features of Adam Smith's Definition

• Adam Smith was concerned with the problems arising from wealth-getting and wealth-using activities of people.
• He studied ways to increase the wealth of all nations.

Criticisms of Adam Smith's Definition

• Ignores higher values of life.
• Has a narrow concept of wealth.
• Reduces man to a secondary place.
• Ignores the problem of scarcity.

Welfare Oriented Definition (Alfred Marshall)

• Economics is a study of man in the ordinary business of life.
• It enquires how he gets his income and how he uses it.
• It examines the part of individual and social action connected with the attainment and use of material requisites of well-being.

Features of Welfare Oriented Definition

• Studies mankind.
• Examines ordinary business of life.
• Focuses on material welfare.
• Emphasizes requisites of well-being.
• Excludes non-economic activities.

Criticisms of Welfare Oriented Definition

• Economics is considered a social science only.
• Impractical classification of activities.
• Materialistic aspect.
• Restricted scope of economics.
• Vague concept of material welfare.

Test your understanding of the definition of economics as a social science that studies human wants and scarce resources. Covers production, distribution, and consumption of goods and services.