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SURAJIT DUM
SAKTIGHAR, ROAD NO- 06
CONTACT NO -7001016057
[Q]
(A)Define economics? Write its nature and scope of
economics (4+16)
(B)Economics is a normative science explain? (4/5/6/8)
Introduction to Economics
Economics is a social science that studies how individuals,
businesses, and governments allocate scarce resources to meet
various needs and wants. It analyzes how these entities make
decisions about production, distribution, and consumption,
and explores how these choices impact society as a whole.
The discipline can be divided into two primary branches:
microeconomics, which focuses on the behavior of individuals
and firms, and macroeconomics, which examines the
economy as a whole.
Definitions by Economists
1. Adam Smith: Considered the father of modern
economics, Smith defined economics as the study of "the
nature and causes of the wealth of nations" (1776),
emphasizing the role of free markets and self-interest in
promoting economic prosperity.
2. Alfred Marshall: He described economics as "a study
of mankind in the ordinary business of life" (1890). Marshall
highlighted how economics helps to understand how wealth is
earned and how it contributes to human welfare.
3. Lionel Robbins: Robbins (1932) offered a more precise
definition, stating that economics is "the science which studies
human behavior as a relationship between ends and scarce
means which have alternative uses," focusing on the concept
of scarcity and choice.
4. Paul Samuelson: Samuelson defined economics as "the
study of how societies use scarce resources to produce
valuable commodities and distribute them among different
people" (1948), integrating both micro and macro
perspectives.
Nature of Economics
The nature of economics has long been debated, particularly
regarding whether it is a science. Economics deals with
human behavior, decision-making, and the allocation of scarce
resources, which brings up questions about whether it can be
classified as a science in the same way as physical sciences
like physics or chemistry.
Arguments in Favor of Economics as a Science
1. Scientific Methods: Economists use scientific methods
like observation, data collection, and statistical analysis to
derive conclusions. For instance, econometrics applies
mathematical models to test economic theories and
predictions.
2. Predictability: Many economic theories provide
predictable outcomes. For example, the law of demand states
that when the price of a good falls, its demand increases,
which holds true in most cases.
3. Universality: Economic principles such as supply and
demand, opportunity cost, and scarcity apply universally
across different societies, suggesting that economics operates
under general laws similar to those in natural sciences.
Arguments Against Economics as a Science
1. Human Behavior: Economics deals with human
decisions, which are often unpredictable and irrational. Unlike
natural sciences, where controlled experiments are possible,
human emotions, biases, and social factors can affect
economic behavior, making it difficult to apply the exactitude
of science.
2. Lack of Controlled Experiments: In physical sciences,
controlled laboratory experiments can be performed.
However, economics relies heavily on real-world data, which
is influenced by a wide range of unpredictable and dynamic
factors.
3. Normative Aspects: Economics often deals with
subjective value judgments, such as what should be produced
or how resources should be distributed, which cannot be
empirically tested or universally agreed upon.
Scope of Economics
The scope of economics is vast, encompassing various aspects
of human behavior and societal interactions. It can be broadly
divided into microeconomics and macroeconomics.
1. Microeconomics: This branch focuses on the behavior
of individual units such as households, firms, and industries. It
examines how these entities make decisions regarding
resource allocation, production, consumption, and pricing.
Topics such as demand and supply, market structures, and
consumer behavior are key components of microeconomics.
2. Macroeconomics: Macroeconomics looks at the
economy as a whole, analyzing aggregate indicators like GDP,
inflation, unemployment, and national income. It studies
large-scale economic factors, government policies,
international trade, and economic growth. Issues such as
monetary policy, fiscal policy, and economic cycles fall under
its scope.
ADV.SURAJIT DUM
SAKTIGHAR, ROAD NO- 06
CONTACT NO -7001016057
3. Development Economics: This focuses on the
economic progress of developing nations, poverty reduction,
and improving standards of living.
4. International Economics: It examines global trade,
exchange rates, and the economic relations between countries.
5. Welfare Economics: Welfare economics studies how
economic policies affect the well-being of individuals and
society.
Conclusion
Economics possesses characteristics of both a science and a
social study. It uses scientific methods and general principles,
but its reliance on human behavior and the influence of value
judgments make it distinct from natural sciences. Therefore, it
is more accurately described as a social science, balancing
both objective analysis and subjective decision-making.
(B)Economics as a Normative Science
Economics as a normative science deals with value judgments
about what the economy should be like or what policy actions
should be taken to achieve desirable outcomes. It focuses on
the ethical, subjective, and prescriptive aspects of economic
issues, offering recommendations based on personal values,
societal goals, and priorities.
While positive economics describes "what is" by analyzing
facts and cause-and-effect relationships, normative economics
concerns itself with "what ought to be." For example, a
positive economic statement might say, "Raising the minimum
wage will increase costs for businesses," whereas a normative
statement would argue, "The government should raise the
minimum wage to ensure fair living standards."
Normative economics is often used in policy-making, where
economists propose solutions based on their views about
equity, justice, and societal welfare. It includes debates about
income redistribution, healthcare access, and environmental
regulations.
However, normative economics cannot be tested or proven
right or wrong through data, as it relies on opinions, values,
and ethical considerations. Since different people and
societies have varying views on fairness and equity, normative
economics often leads to policy debates and discussions.
In conclusion, economics as a normative science provides
guidance on what should be done, emphasizing the moral and
ethical dimensions of economic decisions.
ADV.SURAJIT DUM
SAKTIGHAR, ROAD NO- 06
CONTACT NO -7001016057
