ECO 121- Principles of Economics

Economics is a science which deals with wealth creation through production of goods and services, their distributions as well as consumption. The process plays a huge task in the society because it influences the majority of our decisions in our day-to-day activities. However, defining economics has pose difficulties because there is no single acceptable definition. Therefore different economists have given economics different types of definitions. Famous among these economists were: Adam Smith, David Ricardo, Thomas Malthus, J.S. Mill, John Stuart Mill., Karl Marx, Alfred Marshall, J. B. Say, James Henderson, John Keynes, Irving Fisher, Lionel Robbins and host of others. Each of these famous economists either gave a definition which others think it is either too narrow or too broad to describe economics. Brooks (2012) is of the view that economics can be confusing therefore it is difficult to find a single or clear definition of it. However, the definition given by Lionel Robbins in his book, An Essay on Nature and Significance of Economic Science received several criticisms but remains a mainly acceptable definition of economics. Robbins defined economics “as a science which studies human behaviour as a relationship between given ends and scarce means which have alternative uses”. This definition touched on major aspect of economics such as human behaviour (rationality), human needs and scarce resources, choices as a result of scarce resources and alternative uses of resources. The decisions made by individuals, corporations and governments are vital to their survival. Therefore, studying economics and understanding its principles is imperative. Studying economics provides many helpful benefits. For instance, an individual is assisted in understanding the decisions on household issues; it assists business outfit in understanding the financial sector, the impact of government decision making on their business and latest development in business society and the global economy. It also teaches the concept of relative scarcity as a result of limited resources, supply and demand, choices, opportunities, opportunity cost and benefits and how all these can impact the decision making of individuals, businesses and government. It also teaches how these decision making processes affect the society.