IENGINEERS- CONSULTANTS LECTURE NOTES SERIES ENGINEERING AND MANAGERIAL
ECONOMICS V SEM BTECH UNIT1
MEANING OF ECONOMICS:
Economics is the social science that analyzes the production, distribution, and consumption of goods and
services. The term economics comes from the Ancient Greek word oikonomia, which means
"management of a household, administration" (from oikos, "house" + nomos, "custom" or "law", hence
"rules of the household"). Current economic models emerged from the broader field of political economy
in the late 19th century. A primary stimulus for the development of modern economics was the desire to
use an empirical approach more akin to the physical sciences.
Wealth and Welfare Definition:
The Classical View: The classical economists beginning with Adam Smith defined economics as science
of wealth. Adam Smith defined it as the “nature and cause of wealth of nations,” whereby it “proposes
to enrich both the people and sovereign.” His follower J.B. Say in France defined economics as “the study
of the laws which governs wealth.” Other followers of classical view like Nassau Senior, F.A. Walker,
J.S. Mill, and J.E. Cairnes also defined economics as a matter of wealth.
The Neo-Classical View: Marshall’s Definition: Alfred Marshall laid emphasized on man and his
welfare. Wealth was regarded as the source of human welfare, not an end in itself but a means to an end.
According to Marshall in his book entitled ‘Principles of Economics, “Political Economy or Economics
is the study of mankind in the ordinary business of life; it examines that part of individual and social
action which is most closely connected with attainment and with the use of material requisites of well
being. Thus it is on the one side a study of wealth; and on the other, and more important side, a part of
the study of man.”
Scarcity Definition of Robbins: In the publication “Nature and Significance of Economic Science” in
1932 Robbins defined, “Economics is the science which studies human behavior as a relationship
between ends and scarce means which have alternative uses.” This definition is based on the following
Economics is related to one aspect of human behavior, of maximizing satisfaction from scarce
Ends and wants are scarce. When a particular want is satisfied other crop up to take place.
The obvious reason for the non satisfaction of unlimited wants is the scarcity of means of the
disposal of mankind. The time and means available for satisfying these ends are scarce or
The scarce means are capable of alternative use. At a time, the use of a scarce resource for one
end prevents its use for any other purpose.
Economics is related to all kinds of behavior that involve the problem of choice.
Growth oriented Definition: Prof. Samuelson’s View: Modern age is age of economic growth. Its main
objective is to increase social welfare and improve the standard of living of the people by removing
poverty, unemployment, inequality of income and wealth etc. of nation. Prof. Samuelson has given a
definition of economics based on growth aspects. According to him: “Economics is the study of how
people and society end up choosing, with or without the using of money, to employ scarce productive
resources that could have alternative uses to produce various commodities, over time and distribute
Engineering and Managerial Economics
By: Mayank Pandey