CMA Foundation · Fundamentals of Business Economics and Management · The Fundamentals of Economics
A student says, 'Economics studies how society uses limited resources that have alternative uses to satisfy unlimited wants.' Which definition of economics does this statement most closely reflect?
The statement reflects Lionel Robbins's scarcity definition, because it centres on limited means with alternative uses and unlimited wants. Smith's definition focused on wealth, and Marshall's on material welfare, so neither fits the emphasis on scarcity and choice.
- AWealth definition of Adam Smith
- BWelfare definition of Alfred Marshall
- CScarcity definition of Lionel RobbinsCorrect
- DGrowth definition of Paul Samuelson
Explanation
Robbins defined economics as a science studying human behaviour as a relationship between ends and scarce means which have alternative uses. The statement stresses scarcity, alternative uses and unlimited wants, which are the core of this definition. Smith focused on wealth and Marshall on material welfare.
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