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Economics Keypoints: Economics As A Science

Economics Keypoints: Economics As A Science; Economics is widely recognized as a social science concerned with the interactions of individuals and society. Critics claim that economics is not a science since it lacks testable hypotheses and the ability to reach a consensus.


Definitions Of Economics

Alfred Marshall: “a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment, and with the use of the material requisites of wellbeing”

Lionel Robbins: defined economics as “the science which studies human behavior as a relationship between (given) ends and scarce means which have alternative uses.” 

What Are The Basic Concepts Of Economics?

  • Wants,
  • Scarcity,
  • Choice,
  • Scale of preference,
  • Opportunity cost,
  • Rationality,
  • Production,
  • Distribution,
  • Consumption

Wants: A want is something that is sought in economics. It is said that everyone has a limitless number of desires but only a limited number of resources (economics is based on the assumption that only limited resources are available to us). As a result, people cannot have everything they desire and must seek out the most cost-effective options.

Scarcity: Scarcity is a fundamental economic notion. It denotes that the demand for a good or service exceeds the availability of the good or service. As a result, scarcity might limit the options available to consumers, who ultimately comprise the economy.

Choice: The ability of a consumer or producer to select which good, service, or resource to purchase or supply from a set of available possibilities is referred to as choice. The ability to choose is viewed as a key measure of economic well-being and development.

Scale of preference: A scale of preference is a collection of unfulfilled wishes arranged in descending order of priority. A preference scale is a collection of unmet desires arranged in order of priority or importance. This facilitates decision-making. The most pressing demands are listed first, followed by the least urgent.

Opportunity Cost: When economists talk about a resource’s “opportunity cost,” they mean the value of the next-highest-valued alternative use of that resource. If you spend time and money going to the movies, for example, you cannot spend that time at home reading a book, and you cannot spend the money on something else.

Rationality: For economists, rationality simply means that while making a decision, you will choose the thing you enjoy best. ¹ This is considerably different from how we generally consider rationality. When we talk about rationality, we usually mean sensible or reasonable.

Production: Economic production is an activity carried out under the supervision and direction of an institutional unit that uses labor, capital, and goods and services as inputs to generate outputs of goods or services.

Distribution: The term “distribution” refers to spreading a product throughout the marketplace so that a big number of people can purchase it. A company’s distribution can make or break it. Simply said, a good distribution system indicates that the company has a better probability of selling its items than its competitors.

Consumption: Consumption is the use of products or services by institutional entities; consumption can be intermediate or final. It is the utilization of goods and services to meet individual or communal human wants or needs.

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