Economics belongs to the branch of knowledge known as the “Social Sciences.” The social sciences deal with both intergenerational and intra-generational interactions between human beings in a society.
Human activities can, of course, be studied from many different perspectives. One could look at humans as political, psychological, historical, or economic beings. A political scientist, for example, would analyze the political activities of the people while an economist would examine activities related to their livelihood. Human beings, in order to fulfil their innate desire for food and shelter, engage in activities that lead them to the production of goods such as food, clothing, and housing, as well as services. These acts of production and consumption to satisfy human wants form the very basis of the subject matter of Economics. Perhaps observing people engaged in this pursuit, Alfred Marshall defined economics as “a study of mankind in the ordinary business of life.”
Since the ordinary business of life involves the use of limited natural and human-made resources (capital), people have always been interested in making the best possible use of these resources. This efficient use of resources has been the underlying theme in economics. Hence, the most succinct definition of economics would be that economics deals with the efficient utilization of scarce resources to satisfy human wants. Scarcity gives legitimacy to economics. If there is no scarcity, there is no economic problem.
The discipline of Economics is built upon two strands of theory: Microeconomic Theory and Macroeconomic Theory. Microeconomic deals with the study of individual units in an economy, such as consumers, producers, and the interaction of these units in a given market structure. Macroeconomic theory, on the other hand, deals with the economy as a whole. Here we analyze the problems related to unemployment, growth, inflation, and the balance of payments. Most of the other courses in Economics are applied courses which use the concepts of Microeconomic Theory and/ or Macroeconomic Theory. An understanding of the relationship between these two theory courses and other fields in economics is usually helpful in planning a student’s selection of courses.
