Introduction to Economics Definitions

Economics Definitions

• Economics is the study of how economies function.
• Economics deals with wealth.
• Economics is a science that deals with scarcity.
• Economics is a science of choice and is neutral between ends.
• Economics is the study of dynamic growth and development.

Key Economists

• Lionel Robbins defined economics as a science that studies how humans make choices under scarcity. He wrote the book "Nature & Significance of Economics."
• Adam Smith is considered the father of modern economics, and his book “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776) defined Wealth as something that can be exchanged.
• Karl Marx and Frederick Engels developed the concept of a socialist economy.
• Sir Robert Giffen is known for the Giffen goods paradox, where demand for a good increases as its price rises.
• Alfred Marshall defined economics as the study of humankind in the ordinary business of life, including both positive and normative aspects. He introduced the concepts of consumer surplus, the time element, and the law of diminishing marginal utility (DMU).
• Stigler is associated with the study of oligopoly market structures.
• Chamberlin developed the theory of monopolistic competition, distinguishing between selling costs and production costs.
• James Duesenberry proposed the Demonstration Effect, where consumer spending is influenced by the consumption patterns of others.
• Thorstein Veblen described the Veblen Effect (also known as the Prestige Goods Effect), where consumers value goods based on their conspicuous consumption.
• Hicks and Allen developed the Substitution Effect, the Ordinal Approach, and IC Analysis.
• C.W. Cobb and Paul H. Douglas created the Cobb-Douglas Production Function, a model for production.
• Schumpeter argued that innovation is the key function of an entrepreneur.
• Paul A. Sweezy developed the Sweezy Model, which includes a kinked demand curve to explain price rigidity in oligopoly markets.
• Keynes argued that fluctuations in economic activity are driven by changes in aggregate effective demand.

This quiz explores fundamental definitions and key concepts in economics, highlighting the thoughts of influential economists such as Adam Smith, Karl Marx, and Alfred Marshall. Gain a clearer understanding of how economics functions, the nature of wealth, and the implications of scarcity in decision-making.