Economics Economics What is Economics Branches of Economics

Economics

Economics • What is Economics? • Branches of Economics • Difference between Microeconomics and Macroeconomics • Microeconomics versus Macroeconomics Variables • Definition of Economics by Different views • Classical View • Neo-Classical View • Modern View

What is Economics • Comprehensive definition of economics has been given by Dr. Robbins • ``Economics is the science which studies human behavior as a relationship between multiple ends and scarce means which have alternative uses. • Relationship↓ • Multiple ends →Human Behavior ←Scarce means or scarce resources. • Economics is a science of choice and scarcity

Branches Economics deals with many disciplines and branches, but generally we deal in economics with 1. Microeconomics 2. Macroeconomics Different branches of economics are further deal with respect to microeconomics and Macro economics

Microeconomics & Macroeconomics • Microeconomics: • Macroeconomics: • Microeconomics is the branch of • Macroeconomics is the branch economics which deals with the of economics that deals the behavior of individual(s), firm, behavior of economy as a whole, and household. at aggregate level or at national level. • It deals at micro level, small level etc • It deal at large scale, national and International level, as Aggregate.

… • Difference between microeconomics and macroeconomics is that microeconomics deals at individual, small, household or at firm level. Eg; consumer behavior, individual income, firms profit, household expenditures etc. • Whereas! • Macroeconomics deal the behavior of economy as a whole or at aggregate level. Eg; National Income, Consumption Expenditures, National Savings, Investment etc.

Microeconomic Variables versus Macroeconomic Variables Microeconomics Variables: Consumer Income (Yd), Utility (U), Quantity demand(Qd), Quantity supply(Qs), Price(P), Firm`s Profit (∏), Individual savings (s) Macroeconomics Variables: National Income (Y), Aggregate Consumption (C), National Savings (S), Investment (I), Trade (Export (X) and Import (M)), Inflation,

Definition of Economics by Different Views 1. Classical View 2. Neo-Classical View 3. Modern View Classical View: 1. Adam Smith is considered as Father of Economics and he was pioneer of Classical school of thought. He defined economics in his book as ;

… • (a) Production of Wealth • (b) Consumption of Wealth • (c) Exchange of Wealth • (d) Distribution of Wealth • According to Classical Economists; • ``Economics is a science of wealth`` • `Economics is a science which deals with wealth`

… • Neo-Classical View; Dr. Marshall is the pioneer of Neo-Classical School of thought. He criticized the Adam Smith`s view of wealth and define economics as material and social welfare. According to Marshall; ``Economics is a science which deals with the human material welfare. ``

… • Modern View of Economics: • Doctor Robbins harshly criticized the marshall`s view of economics and gave the brief and comprehensive definition of Economis as • Economics is a science of Choice and Scarcity

… • Next topic will be Consumer Behavior