Short note on the subject matter of economics.

Subject matter of economics..

 

Various economists defined economics in various ways. So it's very difficult to define the subject matter of economics. However, economics is always concerned with the economic activities of human beings. Therefore, subject matter of economics is economic circle which consists of three variables i.e wants, efforts and satisfaction, it's represented in the following figure:

         

              According to classical economists, the subject matter of economics is wealth. According to Marshall, the subject matter is study of social man in respect to material welfare. And according to Robbins, the subject matter of economics is the scarcity and choice. 

          According to classical view, the process of wants, efforts and satisfaction is divided into five sections of study. 

1. Consumption: Consumption means destruction of utility to satisfy human wants. In consumption, economics studies about various laws and theories derived from consumer's behavior like law of demand, law of supply, elasticity of demand and supply, theories of utility etc. 

2. Production: Production means creation of utility in the form of goods and services to satisfy human wants. In production, economics studies about meaning, characteristics, laws and other aspects of land, labour, capital and organization. 

3. Exchange: Voluntary, mutual and legal transactions of goods and services between or among the people is called exchange. In exchange, economics studies about meaning, types, characteristics and price and output determined in different markets. 

4. Distribution: Distribution is thep process of determining prices of factors of production. In distribution, economics studies about nature and laws of these factor pricing. 

5. Public finance: It's a science of managing income and the expenditure of public body like government. In public finance, economics studies about sources of revenue, process of allocation of resources and other aspects of finance. 

      According to modern economists, the subject matter of economics is broadly divided into two parts i.e micro and macro economics. Microeconomics is the study of individual economic units and individual economic variables. And macroeconomics is the study of aggregates and sub aggregates related to the whole economy.