® Introduction Economics is about making choices. We make all kinds of choices every day.Many people hear the word “economics” and think it is all about money. Economics is not just about money. It is about weighing different choices or alternatives. Some of those important choices involve money, but most do not. ‘The philosopher Adam Smith (1776) defines the subject as "an inquiry into the nature and causes of the wealth of nations, ‘Alfred Marshall provides a still widely cited definition in his textbook Principles of Economics (1890) that “Economics isa study of rman in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus, itis on the one side, the study of ‘wealth and on the other and more important side, a part of the study of man.” ‘The philosopher LionelRobbins (1932) defines the subject as " Economics is a science which studies human behaviour as 2 relationship between ends and scarce means which have alternative uses.” In its most simple and concise definition, economics is the study of how society uses its limited resources. Economics is a social science that deals with the production, distribution, and consumption of goods and services. Economics focuses heavily on the four factors of production, which are land, labor, capital, and enterprise. These are the four ingredients that make up economic activity in our world today and can each be studied individually. Types of Economics Microeconomics: ‘The branch of economics that studies the behavior of an individual consumer, firm, family is known as Microeconomics. ‘The scope of microeconomics is narrow as It pertains to small aspects of economics. Theory of Product Pricing, Theory of Factor Pricing, Theory of Economic Welfare. Applied to operational or internal issues. Helpful in determining the prices of a product along with the prices of factors of production (land, labor, capital, entrepreneur etc.) within the economy. 6. It is based on unrealistic assumptions, ie. In microeconomics itis assumed that there is a full employment in the society which is not atall possible. veer y » Macroeconomics: 1. The branch of economics that studies the behavior of the whole economy, (both national and international) is known as Macroeconomics 2. The scope of macroeconomics is wide as it pertains to larger aspets of economics 3. Theory of National Income, Aggregate Consumption, Theory of General Price Level, Economic Growth. 4. Environment and external issues. 5. _ Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, reflation, unemployment and poverty as a whole. 6. It has been analyzed that ‘Fallacy of Composition’ involves, which sometimes doesn't proves true because it is possible that ‘what is true for aggregate may not be true for individuals too. Interdependency {As microeconomics focuses on the allocation of limited resources among the individuals, the macroeconomics examines that how the distribution of limited resources is to be done among many people, so that it will make the best possible use of the scarce resources. As microeconomics studies about the individual units, at the same time, macroeconomics studies about the aggregate variables, Both are of the view that the nation’ s economic welfare is possible only when there is the best possible utilization of productive resources. In this way, we can say that they are interdependent. Further, to have a full understanding of economics, the study of both the two branches is pertinent.