Rajasthan Board RBSE Class 11 Economics Notes Chapter 2 Nature and Scope of Economics
→ Economics is a developing and dynamic social science.
→ All economic activities are studied under economics.
→ Prof. Keynes has incorporated three elements in the scope of economics
- Subject matter of economics
- Nature or characterstics of economics
- Association of economics with other sciences.
→ Supporters of the classical economists’ outlook include economists like Adam Smith, J.B. Say, J. S. Mill, etc.
→ Welfare economists such as Marshall, Pigou, etc. have considered human welfare to be the major subject matter of economists.
The subject matter of economics is divided into 5 parts-
- Consumption
- Production
- Exchange
- Distribution
- Public Finance
→ Consumption is an economic activity that is related to the consumption of utility of goods and services for direct satisfaction of individual and collective necessity.
→ Production is related to increasing the utility or value of goods and services. The main factors of production are land, labour, capital, organization and entrepreneurship.
→ The process of exchange activity is related to the purchase and sale of any object or service.
→ Distribution is the distribution of income among different factors of production.
→ Study of public income, public expenditure, public debt, deficit financing, tariff policy etc. is included under public finance.
→ In economics, only a single subject, i.e. intererelated activities as, consumption, production, exchange, etc. are systematically studied. Thus, economics is a science.
→ Creating general rules like science, economics also has the ability to explain events in the correct and appropriate
quantity.
→ Many learned economists do not consider economics as a science.
→ Economics studies the essence of, and ups and down in humans behaviour which is not found in any other sphere. Therefore, definite prediction is not possible in the situation of uncertain behaviour.
→ Economists use the scientific method/which cannot be successful in economics as in physics and natural sciences.
→ The data which is compiled and used is science are definitely stable and reliable and the results evaluated on their basis are fixed and true, while the data compiled in economics keeps changing continuously. Therefore the results evaluated on that basis are not true and definite as in science.
→ In addition to being an empirical science, economics is also an normative science.
→ What is this? Why does that happen? And how does it happen? Economics explains all this. As an empirical science, cannot explain the good or bad or the right or wrong of economic activities. That depends on prudence.
→ Economics throws light on the merits and dimerits of economic events and actions as an normative science.
→ Professor Robbins has written that in view of the scarcity of resources, man should act according to his best area of ability and according to his skills.
→ Economics is also an art besides being a science.
→ It is an art to accomplish any goal with efficiency, which gives us practical knowledge. It analyzes the problem and also provides an optimum solution.
→ There is a difference in the nature of art and science.
→ Science discovers a subject and interprets it, while art gives practical information about it.
→ Only an economist can take a final decision on the problems which are purely of economic nature.
→ Politicians can determine the employment policy, taxation policy, etc. only when they have adequate knowledge of economic aspects associated with them.
→ Theoretical economics is a science an practical economics is an art.
→ Economics is a social science in which only human activities are studied. Animals, birds and other living organisms are not studied in economics.
→ The main elements of development and its parameters, etc. are studied under the new branch of economics, ‘developmental economics’.
Nature and Scope of Economics Class 11 RBSE Notes Important Terms
• Consumption Consumption is that economic activity which is related to the consumption of goods and services for direct satisfaction of individual and collective necessities.
• Production Its purpose is to make goods and services useful and to increase their value.
• Exchange Exchange activity is related to the purchase-sale, or exchange of a commodity or resource.
• Distribution Equitable division of income between different means of production is called distribution.
• Public Finance Under this, public income, public expenditure, deficit financing, etc. are studied.
• Science Science is the orderly study of knowledge that explains the cause and effect.
• Art Art is the accomplishment of a goal by undertaking skilled and efficient work.
• Positive Science It is the science that studies and analyzes the causes and the consequences, but does not say anything about merits and demerits. It is also called positive or real science.
• Normative Science The science that discusses policy that is, tells what should be? Economics as a normative science highlights the merits and demerits of economic actions.