Question 15 of 35
Q.(a) Elaborate the Nature and Scope of Economics.
(OR)
(b) Explain the Sub-Divisions of Economics.
Tamil Nadu DgeTamil Nadu HSC First Year (DGE) Commerce Board 2020Subjective· 5mImportance★★★★★
43% · 15/35 Questions
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Start your 14-day free trial to unlock the full solution →(a) Economics is both a science and an art, and both positive and normative; its scope runs from its definitions to micro and macro analysis. (b) The traditional sub-divisions of economics are Consumption, Production, Exchange and Distribution, with Public Finance/Growth added later.
(a) Nature and Scope of Economics.
Nature — Is economics a science or an art?
- As a science, it is a systematic body of knowledge that studies cause-and-effect relationships and frames laws (e.g. the law of demand). It is a social science, since it studies human economic behaviour.
- As an art, it applies these laws to solve real problems (e.g. controlling inflation).
- It is also both positive (studying what is — factual statements) and normative (studying what ought to be — value judgements, policy). Hence economics is best described as both a positive and a normative science, and both a science and an art.
Scope — the boundaries and subject matter of economics:
- The evolving definitions: Wealth (Adam Smith), Welfare (Alfred Marshall), Scarcity (Lionel Robbins), and Growth (Paul Samuelson).
- Its central concern with the allocation of scarce resources having alternative uses.
- Its two broad branches: Micro economics (individual units — a consumer, a firm, a market) and Macro economics (economy-wide aggregates — national income, employment, general price level).
(b) Sub-Divisions of Economics. Traditionally, economics is divided into four sub-divisions, following the flow of economic activity:
- Consumption — the use of goods and services to satisfy wants; studies utility, demand and consumer behaviour. …
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