HSEB Notes on Scope of Economics
Class : 11
Scope of any subject means the area of its study. The scope of economics refers to the coverage of economics. In other word scope of economics includes all the branches of economics such as subject matter of economics, nature of economics, relation with other science and its limitation.
Subject matter of economics
The subject matter of economics is quite controversial, economist belonging to classical age define economic as the science of wealth. Whereas, Neo-Classical economist says it is the science of material welfare and after sometime the modern economist defined economics as science of scarcity and choice
Broadly, subject matters of economics can be define in two headings that is traditional approach and modern approach.
Traditional Approach
According to traditional approach economics is treated as the study of want, efforts and satisfaction, every human beings has several wants and to fulfill these wants they make some effort and these effort give satisfaction, it means want, efforts and satisfaction run in a circle. In economics this circle is related production, consumption, exchange, distribution and public finance.
Production: WE produce goods and services for consumption. In production we study the theory of production such as law of variable proportion and law of variable proportion and law of return to scale.
Consumption: Human Beings consume different types of goods and services for satisfaction. The main topics under the consumption are consumer surplus, law of dimension, marginal utility, and law of substitution.
Exchange: Exchange is the link between production and consumption. In exchange we study the determination of price of goods and services. Under different market. The markets are perfect competition, monopoly, monopolistic etc. It also covers financial systems.
Distribution: the national income is distributed among various factor of production means land labor capital and organization.
Public finances:
Public finance is the balance sheet of government because it studies income and expenditure of government. Income part covers tax and non-tax sources and expenditure heading occupy general and development expenditure
Modern Approach
According to modern approach, the subject matter is divided into two parts.
Micro:
Micro economics studies individual units of economic such as individual industry, single firm, particular price, wages, household and etc. It is just related with any single or particular subject matter.
Macro:
Macro economics studies the economic as a whole as and aggregate level. It studies national income, general price level, employment level, monetary and fiscal policy etc.
Relation of economics with other science.
Economics and political science:
Economics and political science are two parts of same coin. Because all the political problems are economic problem. Economic growth is possible when there is political stability. Most of the time of the parliament is spend on the matter of economic development and growth. On the other side, if economy is strong then there is political stability. Therefore, there is very close relationship between politics and economics.
Economic and Geography
Geography is also related to physical structure, natural resources and climate. National economy is directly influenced by these things because; economic development is only possible through rational utilization of natural resources, better climate and suitable physical structure. Hence there is close relationship between economic and geography.
Economy and math
Economics and Math are closely related with each other because economic resources are not possible without math. Math helps to explain the economic theory in simple form.
Economic and History
Economics has close relationship with history. It use past data to analyze the present economic problem. It still provides essential information for making new economic policies and theory. Therefore, it is said economics is incomplete without history.
Economics and ethics
Economics is also related with ethics because most of the economic activities are done on the basis of morality or ethics. Ethics focuses on what is good and what is bad in the same way normative economics also explains what is good and what is bad. Economics is not only shows, cause and effect rather it suggests the remedities measure of the problem.
Economics and Sociology
Sociologist studies all those aspect of society. It explains the economics religious, cultural, politics, etc aspect of human life. An economist explains the economic part of life. It means economics is also and inside part of sociology. Therefore, economics and sociologist both are closely related.
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