Economics

The term economics comes from the Greek for oikos (house) and nomos (custom or law); hence (rules of the house hold).

Different school of thoughts and their definitions

1. Adam Smith: (classical approach)
“Economics is the science of wealth.”

2. Alfred Marshall: (neo-classical approach)
“Economics is study of Material welfare.”

3. Robbins: (modern approach)
“Economics is a science in which we study human relations between ends and scarce resources.”

The modern approach is:

“Economics studies the allocation of scarce resources among people.”
“Economics is the social science that studies the production, distribution, and consumption of goods and services.”

Common Terms:

1. Inputs:
Inputs are products, services, or information needed from suppliers to make a processed work. Generally we call Inputs as Raw Materials.

2. Outputs:
Products, services, or information generated or processed from inputs are called outputs.

3. Factors of Production:
The four factors which process the inputs and generate outputs are called FOPs or Factors of Production. These are 1.Land 2.Labor 3.Capital 4.Entrepreneur.

4. Efficiency:
Efficiency is to get maximum output with minimum input or resources.

5. Effectiveness:
Completion of tasks within due date is effectiveness.

6. Trade off:
If you want to get something, you have to loose something, this is trade off.

7. Opportunity Cost:
The cost of the best forgone alternative is opportunity cost.