Theory of Economics chapter 1


The Word Economics has been derived from greek words “oikas” and nomos where “oikas” means house hold and nomos means management.

Economics emerged as a social science when adonlt smith wrote famous book “wealth of nation” in1976. He emphasized economic in the study of wealth and it studies the economic activities of society. He defined economic studies only consumption production and distrubtion of wealth to the people.

According to the adonlt smith economic help to the factor that determine wealth of countries he explainedd that wealth of countries he explained that wealth of a country determines the growth of the nation and human development of the country.

Human Development of the country

The economic is the study of the nature causes of the wealth of the nation.

  1. Study of Wealth = According to the adonlt smith economics is the study of wealth which is completely related to the production of wealth and distribution consumtion and exchange.
  2. study of economics man = Wealth definition has focused a activity of economic man who always think himself only.
  3. primary place to wealth = The wealth definition has given primary place to wealth and secondary place to man. It totally focus on the labours and generating wealth.
  4. Significance of Wealth = Wealth Definition  Gives the more Emphasis to the Employed labou as a means of Generating ( earning)
  5. The productivity of the labour can be increased by the division of labour

Principles of economics

In 19 Century Alfred marshall who was the leader of neoclassified economic critiched the wealth definition and published a new welfare definition in 1890. He published his book “principle of economics ” with new division of economics theory related to the material welfare. It was mainly Concerned to the Consumtion demand and utility. the marginal utility concept was developed first by marshall.

According to material “Economic is a study mankind in the ordinary business of life. It Examines the part of business of life. IT Examines the part of individual and social action which is most closely connected with the attainment and with the use of material environment requistes well being.



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