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Questions and Answers
What is the primary concern of economics according to the definition of economics?
What is the primary concern of economics according to the definition of economics?
The primary concern of economics is the rational management of scarce resources to maximize economic welfare.
According to Adam Smith, what does the term 'wealth' refer to in economics?
According to Adam Smith, what does the term 'wealth' refer to in economics?
Goods that satisfy human wants
What were Adam Smith's main interests in studying economics?
What were Adam Smith's main interests in studying economics?
The ways by which the wealth of all nations could be increased.
What is the main criticism of Adam Smith's definition of economics?
What is the main criticism of Adam Smith's definition of economics?
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What is the focus of the welfare-oriented definition of economics given by Alfred Marshall?
What is the focus of the welfare-oriented definition of economics given by Alfred Marshall?
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What are the three main features of Alfred Marshall's definition of economics?
What are the three main features of Alfred Marshall's definition of economics?
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What is the main criticism of Alfred Marshall's definition of economics?
What is the main criticism of Alfred Marshall's definition of economics?
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How does Alfred Marshall's definition of economics differ from Adam Smith's?
How does Alfred Marshall's definition of economics differ from Adam Smith's?
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What is the significance of the concept of scarcity in economics?
What is the significance of the concept of scarcity in economics?
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Why is economics considered a social science?
Why is economics considered a social science?
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Study Notes
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.
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Description
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.
