Managerial Economics

Topics: Economics, Social sciences, Macroeconomics Pages: 14 (3604 words) Published: November 4, 2013


Nature and Scope
of Economics

Nowadays, understanding of economic issues has become quite
indispensable for all sections in the society. Everyone wants to get rich; wants to increase their wealth holding; wants to have hold over productive resources; wants to expand their business activities. People want to earn more and more profits, and exercise control over the market and other economic system; people want to raise their living standard and enjoy more and more consumption; people want to make their future secure; everyone wants to grow from the current position; given these, people want to update their knowledge of economic issues and take advantage of that. Besides, people want to grow even in the adverse circumstances or at least survive under these circumstances. This shows that people want to become economically stronger and viable. So that they can lead a better life style. This requires proper understanding of the economic issues.

Such understandings might be developed through formal and informal methods of learning. Most of the people learn informally in the society through their experiences as they get exposed to certain real life situations. However, those who want to make a career in different dimensions, they need to learn it formally. For this, they need to learn it properly, that is possible through pursuing a formal course structure. This gives them a proper understanding of economics. They can apply this knowledge in different contexts. According to Samuelson and Nordhaus (“Economics”; sixteenth edition; 2000), “Often economics appears to be an endless procession of new puzzles, problems, and difficult dilemmas. But as experienced teachers have learned, there are a few basic concepts that underpin all of economics. Once these basic concepts have been mastered, learning is much quicker and more enjoyable.”

2 Engineering and Managerial Economics

It is very difficult to define economics because economics is very dynamic subject. Its scope keeps on changing rather expanding. Still for proper understanding of any subject, it becomes necessary to define it as close as possible. We begin by a general description of economics provided by Wikipedia. It describes economics as below.

“Economics is the social science that is concerned with the production, distribution and consumption of goods and services. The term economics comes from the Ancient Greek—oikonomia, “management of household, administration” from oikos, “house” + nomos, “custom” or “law”, hence “rules of the house (hold)”. Current economic models developed out of the broader field of political economy in the late 19th century, owing to a desire to use of an empirical approach more akin to the physical science.”

“Economics aims to explain how economies work and how economic agents interact. Economic analysis is applied throughout society, in business, finance and government, but also in crime, education, the family, health, law, politics, religion, social institutions, war, and science. The expanding domain of economics in the social science has been described as economic imperialism.”

The above description of economics shows the nature of economics in modern context. It tells that economics can be used for raising the living standard of people and their welfare. However, it also wants that economic issues or economic objectives might become a tool in the hands of people, who want to exploit it for ulterior motive like separation from others. However, now we can discuss some formal definitions given by the economists over a period of time.

Adam Smith is considered to be the first to provide a formal definition of economics contained in his book, “An enquiry into the nature and causes of wealth of nation” published in 1776. Because of this great contribution of Adam Smith, he is regarded as the father of economics. He defined economics as the...
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