Basic Concept of Economics to understand the economics

This is Economic presentation note

1. WELCOME TO THE PRESENTATION ON Basic Concepts in Economics Course Title:MGDS:504 Econonomic Principles and Policies

2. Teacher’s Identity Muhammad Kamruzzaman Associate Professor Dept. of Government & Politics Jahangirnagar University Savar , Dhaka-1342, Email: [email protected] [email protected]

3. Science of wealth: The Early Economist Economics was concerned with “ An enquiry into the nature and causes of wealth of nations ”. ( Adam Smith ) “ Economics deals with the phenomena of wealth. ”( J. E. Cairns Cross ) The Character and Logical Method of Political Economy According to the French economist J. B. Say , “ Economics is the science which treats of wealth. ” Economics is that body of knowledge which relates to wealth. (F. A. Walker )

4. What we are going to study: What is Economics? Three part of definition? What are the economic problems?

5. Basic Concepts of Economics

6. Definition of Three Era Classical ( Science of wealth) – Adam Smith, David Ricardo, John Stuwart Mill, Walker Neo-classical ( Science of material welfare) - Marshall, Cannon, Pigue Modern ( Science of scarcity) - Robbins, Stonier & Hogue, Bober , Lord Kinns , Paul Samuelson, Hanson Dr. J.N. Keynes (Scope and Method of Political Economy) “Political economy is said to have strangled itself with definition”

7. Classical Definition: The Early Economist Adam Smith "father of modern economics" in his famous book (1776) “An Inquiry into the Nature and Causes of the Wealth of Nations” Adam Smith, (16 June 1723 – 17 July 1790) was a- Scottish  moral philosopher pioneer of  political economy , and key  Scottish Enlightenment  figure. Smith is best known for two classic works:  The Theory of Moral Sentiments  (1759), and  An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, usually abbreviated as  The Wealth of Nations , is considered his  magnum opus  and the first modern work of  economics .

8. J. E. Cairnes ( John Elliott Cairnes  (26 December 1823 – 8 July 1875) was an Irish economist . He is often described as the "last of the classical economists". ) In his books, ‘ The character and logical method of Political economy ’ clearly said that economics, “ deals with the phenomena of wealth. ” According to the French economist J. B. Say , “ Economics is the science which treats of wealth. ” The American economist F. A. Walker says that economics is that body of knowledge which relates to wealth . Accordingly, in these definitions, a key position was assigned to wealth in the study of economics.

9. Criticism of classical age: More priority on wealth Absence of human welfare Lack of exact explanation of wealth No specific direction about the way to earn of wealth Failure in explore the exact nature of economics

10. Neo-classical Definition: Marshallian views At the end of the nineteenth century in his famous book “Principles of Economics”

11. “ Political Economy, or Economics, is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well beings .” (Alfred Marshall) Principle of Economics(1890) “ Economics is the study of general methods by which men cooperate to meet their material needs .”( Beveridge ). “ The aim of political economy is the explanation of the general causes on which the material welfare of human beings depends. ” ( Cannan ). Science of Material Welfare: Marshallian Definition

12. Features of Marshallian Definition: Ordinary business of human life Measureable by money, Material requisites Social Science Importance on human welfare

13. Criticism of Neo-classical Definition: More priority on welfare Absence of immaterial welfare Human welfare is not measureable by money Economics is not a normative/policy science , it’s a neutral science Ignore the fundamental problems of human life Scope of economics is narrow in this definition

14. “Economics is fundamentally a study of scarcity and of the problems to which scarcity gives rises.” W.C Stonier and D.C Hague A text Book of Economic Theory “Economics is the science of administration of scarce resource's in human society.”- Oscar Lange Economics: Science of Scarcity

15. ROBBINS’ DEFINITON: SCIENCE OF SCARCITY OR SCIENCE OF CHOICE In his famous book (1931)- “Nature and Significance of Economic Science” “ Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses. ” ( L. Robbins ) Significant terms of the definition: Ends means wants Scarcity means limited resource Alternative uses means problem of choice- mitigate first choice. So, Economics is the science of choice.

16. Features of the Definition: Universal Science Pure and neutral science, not normative science Analytical, Scientific and Realistic Fully chalked out the economic problem Wider content

17. Criticism of the Definition: Absence of human welfare Social features of economics is ignore here Scope of economics spread out Turned into Value fixed theory Not pay attention on economic development and human welfare

18. Major Economic Problems

19. Why does Economic problem arise in a Society? Three Factors depends on arise into an Economic Problem Such as : 1. Unlimited Wants 2 . Scarcity of resources and 3.Choice

20. Thank You THANK YOU