Economics

Definition of economics

  Several economists has defined economics taking various aspects into account/consideration. The word "economics" was coined or derived from the Greek word "oikos" meaning to house and "nemein" which means to manage. This simply means to manage the household using the limited funds available in the most satisfactory way possible. Economics can be referred to as a science that deals with the production, distribution and consumption of various commodities (goods and services) in an economic system.

However, "economics is the social science that studies how individuals use their limited resources to satisfy their unlimited wants".

When we look at this definition more closely, it is observed that economics is the study of people and how they behave.

Hence, two unavoidable points are important to note in this definition.they are;

1. Limited resources:This means that the quantity of product input are few and unsatisfying. Thus every person, nation or country has limited (finite) amount of resources.

2. Unlimited wants: This simply means infinite desires and wishes of men. Ordinarily, human want is insatiable though every person or country has limited means of satisfying these infinite desires (limited resources.)

Let's look closer at this, imagine you were born in a family of five brilliant children and you all wish to go to university but your parents can only afford to pay for two at a time. what would happen?

Adam Smith (1790) defined economics as a science of wealth. He explained how a nation and is created. He moved further to say that the individuals in the society wants to promote only his or her own gain and for that reason, he or she is lead by an Invincible hand to promote the interest of the society though he or she has no such intention.

The most widely accepted Definition of economics was propounded by Lionel Lord Robbins (1932) who defined economics as the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.

The major issue entailed in Lionel Lord Robbins definition are as follows;

1. Human wants are infinite.
2. Resources available to satisfy the desires are finite.
3. The resources available can be used in different ways.
4. The wants can easily be arranged in a scale of preference.

Scopes of Economics

Economics is a subject which is concerned with the activities of people in relation to finance and materials. Economics covers production, distribution and consumption, money and exchange of goods and services. It also includes government participation in the economic activities.