Adam Smith’s Definition of Economics:

Economics is the study of wealth.

According to professor Adam smith in the subject of economics wealth is discussed and
in the discussion of wealth the given three issues are highlighted.
1) How wealth is produced or the production of wealth.
2) How wealth is distributed or the distribution of wealth.
3) How wealth is exchanged or the exchange of wealth.
4) How wealth is consumed or the consumption of wealth.
This definition was appreciated by various another economist like professor walker,
professor chapman and professor walrus.
Criticism:
Professor Marshall was the first economist who was indicated some weaknesses in the
definition which are given below.
Limited Scope:
According to Professor Marshall this definition was incomplete definition between
through the definition the scope of economics is limited up to the study of wealth which
is a great in justice with this subject.
Insult of Human Being:
According to Adam smith economics is the study of wealth which means that human
being is studied the subject of economics for monetary benefits. In other words, human
beings are the worshipper of wealth which is a great insult of human being.
Marshall’s Definition of Economics:
Marshall’s age is also known as a new-classical age. That’s why his definition is also
known as new-classical definition of economics.
In economics the normal human activities are discussed related with material welfare
and welfare can be measured.
For further explanation of this definition now we will discuss the important point on this
definition. Study of normal human activities:
1. Enjoyment of material welfare.
2. Measurement of welfare.
Study of Normal Human activities:
It refers to those human activities which are related with daily routine business life while
the activities which are not related with daily routine business life. For example, the
activities of mad people saints are not discussed in the subject of economics.
Measurement of welfare:
According to Marshall welfare can be measured through the expenditure amount of
money. for example; if an individual fully satisfied after eating two pieces of bread and a
price of bread is Rs 5 only then his satisfaction is equal to Rs10.
Criticisms:
Limited Scope:
This definition was considered only those human activities producing material things in
order to satisfy the general public. While ignore those human activities providing
material things like knowledge and justice which makes the scope of economics very
limited.
Biasness:
In other words, professor Marshall ignore those human activity producing material
things for the sake of satisfaction. It was behaved the biased attitude of with this subject
which is not justified with this subject.
Measurement of Welfare:
According to Marshall welfare can be measured which is not true because welfare is a
sort of feelings which is neither in solid nor in any form. That’s why measurement of
welfare is not a realistic economics is the study of scarcity and choice.

Robbin’s Definition of Economics:

Robbin criticized Marshall’s definition of economics and offered the most precise and scientific
definition of economics.
According to Robbins:
Economics is a science which studies human behavior as a relationship between ends
and scarce means which have alternative uses.
Professor Robbin definition laid down four basic pillars on which the study of modern economics
is structured. we explain the following points of the definition.
Multiple Ends:
Humans wants are unlimited which means that they never come to an ends. Some
wants rise again and again, other keep on rising. All human’s beings are always after
their wants to satisfy them, but they can never satisfy them. However, they keep on
trying to satisfy as many of them as possible.
All Wants Are Not Equally Important:
Humans wants are not of the same importance for human being. Some wants are more
important than others e.g. want are more important than others e.g. want for food is
more important than for T.V. Due to difference in importance in wants, people are
always confronted by the problems of choice between the wants.
Scarce Resources:
Economics resources of the people, individually or in aggregate, are limited economic
resources are two types;
1) Real resources 2) Monetary resources
Both these resources in the firm of wheat, rice, radio, T.V etc. are limited because price
has to be paid to obtain them, similarly, monetary resources in the form of income are
also limited.

Alternative Use of Resources:

Since resources are limited they are therefore used in an alternative way. Take the case
of monetary resources. Supposing a student has ten rupees, with this amount of money
he can either take ice cream or tea or a pencil. Clearly, he cannot buy all these things
for ten rupees. In economics this would mean that he has satisfied one want as an
alternative to the rest of the two wants which are postponed for future. Similarly, in case
of real resources food clothing and houses are limited they satisfy of the wants by these
limited resources at the cost pf other wants which are postponed for future as an
alternative.
1. Study of Economics helps to conquer poverty
Economics studies the, vital question of satisfying human wants with scarce resources.
The present-day poverty and the poor standard of living of the people of many
backward countries are due to poor resources, little production and lack of technology.
The knowledge of economics is essential to eradicate poverty of a nation and to raise
their living standards.
2. Economics teaches the knowledge of economic systems
The knowledge of the subject tells how the complex forces work in the economic
systems. It explains the relationship between the producer and consumer, the labor and
the management etc. It explains how the action in one sector affects the other sector.
Without the knowledge of the working of the economic systems, administration will not
be effective and it may even be impossible.
3. Economics teaches modern methods of production
In practical life, the subject helps the businessmen, the industrialist and the banker as
well as the labor leader. It gives the businessmen and industrialists the knowledge of
modern methods of production and production at low cost.

4. Study of Economics helps in proper budgeting

Economics is useful to the householder. With the knowledge of economics, the
householder is able to utilize his little income to get the maximum satisfaction for his
family by proper budgeting and careful spending. This increases the happiness of the
family.
5. Study of Economics helps to increase national wealth
By studying economics, we can discover new factors that may lead to increase the
national wealth. Modern governments are actively engaged in economic Planning. The
purpose of planning is to remove poverty by increasing the national income and wealth
and also by effectively distributing the wealth. Without the knowledge of economics, this
is absolutely impossible.
6. Study of Economics helps to formulate budget
The knowledge of economics is very essential for the Finance Minister, It helps in
framing the just system of taxation. It helps in formulating the budget for development
and for removing unemployment. Supply of money, effective credit system etc.
7. Study of Economics helps to frame law
The knowledge of economics is very essential for the legislators and parliamentarians.
They will be able to frame laws effectively only by having knowledge of the subject. As
citizens and voters and people. electing the representatives, the knowledge of
economics will be much helpful. It will help the people to understand many economic
programs presented by the political parties in their ‘Election Manifesto’. The people can
wisely judge the truth of the statements in the Manifesto.