Nature And Scope of Economics

This topic deals with the basic tools of economics, how it started and became an individual subject, types of economies and central problem of the economy. It gives us the answer of how the problem of choice is solved with the help of PPC. 
1. Human wants are unlimited : According to Robbins, human wants are unlimited. It is all because of his highly development brain. He cares for what he not, without caring for what he has. As a result want keeps on cropping.

2. Means are Scarce : Means to satisfy human wants are less in number as compared to the volume of wants.

3. Means Have alternative uses : According to Robbins, means satisfy human wants have alternative uses as well. For e.g., Electricity can have numerous uses.

4. Economic Problems : Economic Problems is also called “The problems of Choice Making” arises on account of unlimited human wants to be satisfied with scarce having alternative uses. Thus a person under such situation has to make choice between various wants on the basis of their urgency. This problem of choice making is called Economics Problem.

There are two methods to study Economics.

The deductive method is also known as analytical, abstract or prior method. The deductive method consists in deriving conclusions from general truths. It takes a few general principles and applies them to draw conclusions. 

The basic steps of Deductive Method are: 
(a) perception of the problem;
(b) defining the technical terms and making appropriate assumptions; 
(c) deducing hypothesis; and 
(d) testing of hypothesis deduced. 

(i) assumptions generally turn out to be false or partially true;
(ii) valid conclusions are not drawn in the absence of proper knowledge of the whole situation; and
(iii) it is dangerous to claim universal validity for the economic generalizations so calculated.

Inductive method is also known as empirical method. It was adopted by the Historical SCHOOL OF ECONOMISTS. It works from particular facts to general principle. 

This method derives economic generalizations on the basis of 
(1) Experimentations 
(2) Observations and 
(3) Statistical methods. 

In this method, data is collected about a certain economic problem. These are systematically arranged and the general conclusions are drawn from them. 

The basic steps of Inductive Method are: 
(i) perception of the problem; 
(ii) collection, classification and analysis of data by using appropriate statistical techniques;
(iii) Finding out the reasons for the relationship established through statistical analysis and to set rules for the verification of the principles.

These online MCQ Mock tests and MCQ questions includes all main concepts of the chapter in CS foundation Business Economics

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