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Economics is an important branch of social science, which deals with the behaviour of human beings in relation to economic activities. Economics is derived from two Greek words viz. “Oikos” (means household) and “Nomia” (means management). Therefore, economics was understood as a “Science of Household Management” – managing a household with the limited resources available, in an economical manner. But later, the scope of economics has expanded from mere household management to the nation’s management. Infact, out of social sciences, it is economics which has more practical applicability, hence regarded as ‘Queen of Social Sciences’.
The science of economics was born with the publication of Adam Smith’s classical work “An Inquiry into Nature and Causes of Wealth of Nations” in the year 1776. Before Adam Smith, there were many people who expressed ideas on economics. In the 17th century, Adam Smith was the first person who put all the economic ideas in a systematic way. Hence, he is considered to be the “father of economics”.

Basic premise of economics

  • Human wants are unlimited
  • Means of satisfying these wants are relatively scarce

Coal can be used for producing electricity, heating, running locomotives, in industries, etc. Coal being limited resource, an economy has to decide between the different choices that are available for its use. Hence, economics is the study of how the society uses its limited resources to satisfy its infinite wants and how these resources are distributed among different sections of the society.


Note: Resources are those goods and services which are used to produce other goods and services.


Did you Know?
From 1969, Nobel Prize is awarded to Economics, and the 1st Nobel Prize for economics was shared between two economists, viz. Prof. Jan Tinbergen (Dutch) and Prof. Ragnar Frisch (Norway).

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