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  • Classification of various definitions of economics are:
    • Wealth definition by Adam Smith or classical economists.
    • Welfare definition by Alfred Marshall or Neo-classical economists.
    • Scarcity definition by Lionel Robbins
    • Growth-oriented/Modern definition by Paul A. Samuelson
  • Economics is a study of how an individual and firms makes a decision in fulfilling the unlimited wants with scarce resources.
  • The subject matter of economics has been divided into two parts: Micro Economics and Macro Economics.
  • The central economic problems are - What to produce?, How to produce?, For whom to produce? and What provisions are to be made for economic growth?
  • The “opportunity cost” is the cost of next best opportunity forgone. PPC/PPF curve is analysed with the help of opportunity cost. PPC is a graph which shows the different combination of two goods that an individual or group can efficiently produce with given limited productive resources and technology.
  • A capitalist economy is an economic system in which the production and distribution of commodities take place through Price mechanism i.e., market forces – demand and supply decides the production, consumption and distribution.
  • In a socialist economy, the means of production are owned and operated by the State
  • In a mixed economy, both, public and private institutions exercise economiccontrol simultaneously.

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