Microeconomics is the study of how individuals, households, firms, and governments make choices with limited resources and competing wants. It examines how these economic agents allocate resources and interact in markets to achieve desired ends. Specifically, microeconomics analyzes supply and demand, consumer choice theory, costs of production, market structures, factor markets, and effects of government policies. The document outlines different definitions of economics from a wealth, welfare, and scarcity perspective and criticisms of each.

1. Micro EconomicsMicro Economics
SEMESTER 1SEMESTER 1
FY BBAFY BBA

2. Unit-1Unit-1
Introduction to Micro EconomicsIntroduction to Micro Economics
Definition of EconomicsDefinition of Economics
Lets answer a few questions!
 What is Economics?
 Why do we need to define economics?
 What does the study of economics deal with?
 What is Micro Economics all about?

3. Classification of the Definitions ofClassification of the Definitions of
EconomicsEconomics
Various Schools of
Economic
Thought
The Classical
Or
The Wealth Definitions
The Neo Classical
Or
the Welfare Definitions
The Modern Definitions
Scarcity and Growth

4. Wealth DefinitionWealth Definition
Economics: A science of WealthEconomics: A science of Wealth
Adam Smith in his book “Wealth ofAdam Smith in his book “Wealth of
Nations(1776) has defined EconomicsNations(1776) has defined Economics
as an “as an “Enquiry into the Nature andEnquiry into the Nature and
causes of Wealth of Nations.”causes of Wealth of Nations.”
This view was supported by FrenchThis view was supported by French
Economists J.B. Say and J.S.MillEconomists J.B. Say and J.S.Mill

5. ExplanationExplanation
The wealth Definition emphasized the
following points:-
1. Economics is a science of wealth where it is
all about earning and spending wealth.
2. It proposes to enrich both the people and
the sovereign
3. The emphasis was about material wealth
that of producing, distributing and
consuming material wealth.

6. Criticism
1. Too much importance has been given to wealth as
if wealth meant everything. Little importance was
given to man for whom wealth really meant.
2. Undue emphasis was on wealth producing
activities. The ultimate goal of man was welfare but
not wealth.
3. By stressing on material wealth it has excluded the
nonmaterial goods and services thereby narrowed
the scope of Economics
4. Hence wealth definition was regarded as a dismal
science or the worship of the Mamoon.

7. Welfare Definition
Neo-classical economists like ProfessorsNeo-classical economists like Professors
Marshall, Canman, Pigou have definedMarshall, Canman, Pigou have defined
economics in terms of welfare.economics in terms of welfare.
““ Political economy or Economics is a study ofPolitical economy or Economics is a study of
mankind in the ordinary business of lifemankind in the ordinary business of life, it, it
examines that part of individual and socialexamines that part of individual and social
action which is most closely connected withaction which is most closely connected with
thethe attainment and use of material requisitesattainment and use of material requisites
of well being.of well being. Thus it is on one hand aThus it is on one hand a studystudy
of wealthof wealth and on the other and moreand on the other and more
important side, a part of theimportant side, a part of the study of man.”study of man.”

8. Explanation
1.1. Economics is a study of human activitiesEconomics is a study of human activities
relating to the acquisition of wealth.relating to the acquisition of wealth.
2.2. These activities are intended to promoteThese activities are intended to promote
material welfare.material welfare.
3.3. Acquisition of wealth is important but moreAcquisition of wealth is important but more
important is the contribution of wealth toimportant is the contribution of wealth to
man’s welfareman’s welfare
4.4. Economics is a social science as it studiesEconomics is a social science as it studies
man as they live and move and think in theman as they live and move and think in the
ordinary business of life.ordinary business of life.

9. CriticismCriticism
Robbins in his “Essay on the nature andRobbins in his “Essay on the nature and
significance of Economic Science “foundsignificance of Economic Science “found
fault with this definition. He says-fault with this definition. He says-
1.1. Distinction between material andDistinction between material and
Nonmaterial things faulty.Nonmaterial things faulty.
2.2. Economics not concerned with materialEconomics not concerned with material
welfare.welfare.
3.3. Concept of economic welfare vague.Concept of economic welfare vague.
4.4. The distinction made in this definitionThe distinction made in this definition
between ordinary business of life and extra-between ordinary business of life and extra-
ordinary business of life is not clear.ordinary business of life is not clear.

10.  Economics is not a study of ethics. It is
a neutral science and is neutral as
regards ethics.

11. Robbins Definition
Science of Scarcity and Choice
 ““Economics studies human behavior as
a relationship between ends and scarce
means which have alternate uses.”

12. Basic features of scarcity
definition
 (a) Unlimited wants
 (b) Limited means
 ©Alternative uses of means
 Science of choice.

13. criticismcriticism
 It ignores normative and ethical aspect
 It has reduced economics merely to valuation
theory
 It does not talk about how the levels of
income and unemployment are determined.
 It only talks about resource allocation and not
their generation
 It does not talk about the problem of
unemployment.

14.  It lacks human touch.
 It is abstract and complex.