Paper: Engineering

Economics
Module1: Introduction To Economics
Meaning:
• The word Economics comes from the Greek word ‘OIKOS’ (a
house) and ‘NOMOS’ (a law). To the Greeks, Oeconomicus was
the science of household management. So, economics means
the prudent management of one’s household affairs.
Adam Smith’s Definition(The Classical
View):
• Adam Smith defined economics as a science of wealth.
Name of his book is ‘An enquiry into the nature and causes of
the wealth of nations’.(published in 1776)
Alfred Marshall’s Definition( The Neo-
Classical View):
• Alfred Marshall defined economics as a science of man rather
than a science of wealth.
Name of his book is “Principle of Economics”.Published in 1890.
Robbins’ Definition(The Modern View):
• Robbins defined economics as a science of scarcity or science
of choice. He defined economics as, “ the science which studies
human behaviour as a relationship between ends and scarce
means which have alternative uses”. He has given this definition
in his famous book “Nature and Significance of Economic
Science” ,published in 1932.
Nature of Economics:
• In discussing the topic ‘nature of economics’ , we have to
answer the following questions:
(i) Is Economics a science or an art?
(ii)Is Economics a positive science or a normative science?
Scope of Economics:
• Scope of economics includes both the subject matter of
economics and nature of economics(whether economics is a
science or an art, or is a positive or a normative science).
Subject- Matter of Economics:
• Economics is divided into four main branches for its proper
understanding. They are consumption, production, exchange
and distribution. Now-a-days, public finance also occupies an
important place in economics.
 Concept of Micro and Macro Economics:
*These terms were first used by Ragnar Frisch in economics in 1933.
*The term micro- economics is derived from the Greek word ‘mikros’,
meaning ‘small’ and the term macro- economics is derived from the
Greek word ‘makros’, meaning ‘large’.
*So micro economics may be defined as that branch of economic
analysis which studies the economic behaviour of the individual
economic unit, such as an individual, a particular household or a firm.
*Macro economics, on the other hand, is a study of aggregates.
Under macro economics we study the behaviour not of one particular
unit, but of all the units combined together.