What must a good definition of economics explain?

1. What must a good definition of economics explain? • A good definition must explain what it is that makes economics a distinct subject, different from physics or psychology. (Neither should one believe that there is only one correct definition possible. Many good definitions are possible)

2. What is a simple explanation of Alfred Marshall’s definition of economics? • Alfred Marshall's Principles of Economics was the most influential textbook in economics. Marshall defined economics as • "a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus it is on one side a study of wealth; and on the other, and more important side, a part of the study of man."

3. What is the standard definition given for economics? • "Economics is the social science that examines how people choose to use limited or scarce resources in attempting to satisfy their unlimited wants."

4. Define scarcity. • Scarcity means that people want more than is available. 

5. Define Choice. • People must choose which of their desires they will satisfy and which they will leave unsatisfied. 

6. What is the cost when there is scarcity and choice? • The cost of any choice is the option or options that a person gives up.

7. What do most utopias have in common? • The many utopias designed by reformers, dreamers, and idealists have two things in common: they have no room for economics and they do not work in the real world.

8. How is Star Trek used to eliminate scarcity? •  Some of them take the "Star-Trek" approach and eliminate scarcity by assuming abundance. This approach envisions a technological society that is so advanced that all material needs and wants will be met. In the Star-Trek future this is done with the replicator and the holodeck. If one wants a cup of coffee or anything else, one merely goes up to the replicator, orders it, and it magically appears. The holodeck allows one to have any experience one wants. 

9. How does the teaching of Buddha eliminate scarcity? • The alternative way to eliminate scarcity is the way of Buddha, which is to eliminate want.

10. How does Karl Popper define science? • Philosopher Karl Popper's widely accepted definition of science says that a statement is scientific only if it is open to the logical possibility of being found false. This definition means that we evaluate scientific statements by testing them, by comparing them to the world about us. A statement is nonscientific if it takes no risk of being found false; that is, if there can be no way to test the statement against observable facts or events. • http://plato.stanford.edu/entries/popper/

11. How does the small group called the “Austrian school” see economics? • A group of economists called the Austrian school, for example, has argued that economics starts with assumptions and that economic theory is the logically deduced results of those assumptions. If the theory does not fit the facts, one cannot conclude that the theory is wrong, but only that it is inappropriate to apply the theory in that particular situation because the initial conditions do not agree with the assumptions of the theory.

12. What is the difference between a positive and a normative statement? •  A positive statement is a statement about what is and that contains no indication of approval or disapproval. Notice that a positive statement can be wrong. "The moon is made of green cheese" is incorrect, but it is a positive statement because it is a statement about what exists. • A normative statement expresses a judgment about whether a situation is desirable or undesirable. "The world would be a better place if the moon were made of green cheese" is a normative statement because it expresses a judgment about what ought to be. Notice that there is no way of disproving this statement. If you disagree with it, you have no sure way of convincing someone who believes the statement that he is wrong.

13. What was Thomas Malthus’s main belief about economics? • The two most influential economists in the generation after Adam Smith were David Ricardo and Thomas Malthus. Although they disagreed about many things, they were in general agreement about the topic of population growth, and it was for his writings on this topic that Malthus is best known. Malthus believed that there was a tendency for human populations to grow more rapidly than the food supply could be increased. Land was fixed in amount, and more food could be produced either by tilling it more intensively or by adding less-productive land to tillage. In either case an extra hour of labor brought less than an average return of food. The implication of these two different growth rates is clear--eventually a segment of the population would face starvation, and this would cut the growth rate of population. • http://www.econlib.org/library/Enc/bios/Malthus.html

14. How were both Malthus and Ricardo Wrong with their arguments? • Malthus and Ricardo were wrong when they applied this argument to human populations. The predictions they made did not occur. They underestimated both the capability of technology to improve crop yields and the future of birth rates.