4942 - Sub Topic 1 ss1 Econs Note First Term

Sub-Topic 1: Definitions, Scope and Importance of Economics
Meaning of Economics
Economics has many definitions. The reason is that Economists see the subject from different points of
view.
Adam Smith: He is regarded as the father of Economics because he laid the foundation of Economics
as a discipline/subject. In his book titled “The wealth of nations” written in 1776, he defined Economics
as “an inquiry into the nature and causes of the wealth of Nations”.
Other notable Economicts are Alfred Marshall (1890), John Stuart Mill (1843); Professor Alfred
Pigou; Lord Keynes, H.J. Davenport; Professor Paul Samuelson, Professor Sam Aluko of Nigeria,
Professor Lionel Robbins etc.
Economics has many definitions. The most widely accepted definition is given by Professor Lionel
Robbins which says “Economics is a science which studies human behaviour as a relationship between
ends and scarce means which have alternative uses”. His definition is widely accredited because
it
embraces the following terms:
(i) Economics is a Social Science because it deals with human behaviour and the activities of the
people in the society.
(ii) Ends: These are needs which are desired by the consumer to give satisfaction. Examples are
cars, clothes, foodstuffs, handsets, books etc.
(iii) Scarce means: “Means” are resources which are scarce relative to the demand for them.
(iv) Alternative uses: The scarce resources can be put to so many uses. For example land can be used
for farming or construction of houses, factories.
SCOPE OF ECONOMICS
Economics covers the actions and activities of individual households and firms (microeconomics); and
the actions and activities of the government (macroeconomics) in relation to production, distribution,
consumption, money and exchange of goods and services.
Sub-Topic 2: Importance of Economics and Economics as a Social Science
IMPORTANCE OF STUDYING ECONOMICS
We study economics for the following reasons
Allocation of resources:
(i) It enables the individuals, households, firms, and the government to know how limited resources
can be used effectively and efficiently.
(ii) Reduction of resource wastage: Economics helps to reduce wastage in resource allocation.
Economic decision-makers channel their resource to areas where they are mostly needed.
(iii) Solution to basic economic problems: The study of Economics provides students with basic skills
for analyzing economic problems
(iv) Technique of reasoning and critical thinking: Economics teaches the techniques of reasoning
and power of critical thinking.
(v) Provision of basic tools for analysis: Economics equips the economic agents with the tools of
economic analysis to understand and solve current issues and economic problems confronting
the society e.g. oil glut, oil spillage, oil theft, unemployment etc.
(vi) Rational decision-making; economics enables individuals, and other economic agencies to be
rational or reasonable in the application of scare resources to satisfy unlimited wants. A normal
individual takes decisions in the most acceptable and beneficial ways.
(vii) Helps government economic policies and development: economics helps us to weigh the
economic policies of the government, determine their advantages and disadvantages and offer
the right suggestions on the way forward e.g. problem of unemployment, ‘white-elephant’
projects, inflation, budget etc.
ECONOMICS AS A SOCIAL SCIENCE
Economics is not a physical, pure or natural science subject like Physics, Chemistry or Biology
because its experiments are not carried out with chemicals in the laboratory or with plants in the
farm. Rather, its scientific nature stems from the fact that Economics has laws; and again its
theories and principles are analyzed based on scientific techniques, like observation, selection and
classification of data, analysis and generalization; just like the pure sciences. Its theories and
principles can be verified with facts and figures.
In the strict sense of the word, Economics is a Social Science. This is because it studies human
behaviour, which though cannot be tested in laboratory setting, but can be observed and tested by
applying them to real life situation.

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Sub-Topic 1: Definitions, Scope and Importance of Economics

Professor Lionel Robbins etc.

embraces the following terms:

people in the society.

cars, clothes, foodstuffs, handsets, books etc.

for farming or construction of houses, factories.

Sub-Topic 2: Importance of Economics and Economics as a Social Science

IMPORTANCE OF STUDYING ECONOMICS

We study economics for the following reasons

can be used effectively and efficiently.

for analyzing economic problems

and power of critical thinking.

individual takes decisions in the most acceptable and beneficial ways.

projects, inflation, budget etc.

ECONOMICS AS A SOCIAL SCIENCE

principles can be verified with facts and figures.

applying them to real life situation.

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