Scope and Subject of Economics - Economics Notes Grade XI

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Scope and Subject of Economics

Scope of Economics
Scope of economics means the area covered by economics for its study. The scope of economics is largely determined by the definition of economics. Under the scope of economics, mainly subject matter of economics, nature of economics and relationship of economics with other science are studied.

Subject of Economics
The subject matter of economics is quite controversial (puzzle). The subject matter of economics means what we study in economics or what is the main focus of economic. Economics studies socio-economic behavior of human beings. As human behavior goes on changing according to time, needs and situation, the subject matter of economics also go on changing. The subject matter can be divided on the following basis:-

1. On the basis of representative definitions.
Different economists have given different views regarding the subject matter of economics. The classical economists have defined economics as the nature and causes of wealth as the subject matter of economics. But according to Marshall, the subject matter of economics includes all those activities of social man which promote material welfares. However, Robbins has given the priority to the alternative uses of limited means and included all human activities related to choices in its subject matter of economics.

2. On the basis of economic activities.
Human beings have various wants. In order to fulfill their wants, they make efforts and effort lead to satisfaction as the subject matter of economics.

In economics, the study of wants, efforts, and satisfaction involves consumption, production, exchange, distribution, and public finance.

  • Consumption: It is the process of getting satisfaction by consuming goods and services.
  • Production: It is the process of creating economic activities.
  • Exchange: It is the link between product and consumption. Exchange refers to buying selling activities of the people into various markets.
  • Distribution: It is the allocation of national income to all factors of production, in proportion in their contribution.
  • Public finance: The process of obtaining income and spending it by the government is called public finance.

3. On the basis of modern

  • Microeconomics: It is that branch of economics which studies the small units of economics. It seems like the study of each particular tree of the whole forest. It is the study of an individual firm, household, industry, consumer, etc.
  • Macroeconomics: It is that branch of economics which studies the economy as a whole. It seems like the study of the whole forest, not an individual tree. It studies the aggregate variables such as total consumption, savings, national income, trade cycle.

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