Introduction to Economics

The science of economics was born with the publication of ADAM Smith’s an inquiry into the nation and cause of wealth of nations in the year 1776.

Adam smith is known as the father of economics. At its birth, the name of economics was Political economy. Towards the end of the 19th century there was a definite change from use of word political economy to Economics.

All about economics:

The word Economics was derived from two Greek words oikou and nomos. Thus, the word economics was used to mean home management with limited funds available in the most economical manner possible.

Central problem of an economy:

Economic problem is the problem of choice. The problem of choice has to be faced by every economy of the world, whether developed or developing. Human beings have wants which are unlimited. When these wants get satisfied, new wants crop up. Human wants multiply at a fast rate. The economic resources to satisfy these unlimited wants are limited. In other words the resources are scare. They are available in limited quantity in relation with demand. Resources are not only scare but they also have alternative uses.

There are the causes of central problem:

1. Human wants are unlimited. Human wants get satisfied by consuming goods and services but new wants keep arising.
2. Economic resources are Limited.
3. Resources have alternative uses.