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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Economics is best defined as the study of

a. how society manages its scarce resources.

b. how to run a business most profitably.

c. how to predict inflation, unemployment, and stock prices.

d. how the government can stop the harm from unchecked self-interest.

To determine
Definition of economics.

Answer

Option ‘a’ is correct.

Explanation

Option (a):

The economics can be defined as the study of how society manages its scarce resources. The economy consists of scarce resources and unlimited wants. So the economy is study about how the society manages theses scarce resources to meet this limitless wants. Thus, option ‘a’ is correct.

Option (b):

The business and profitability are two small parts in the economy but economy is not only the study about the how to run the business most profitability. Thus, the option ‘b’ is incorrect.

Option (c):

The economics is not the study of how to predict the inflation, unemployment and stock price. The inflation, unemployment and stock price are important like other factors but not the preliminary factors. So this is not a best definition of economics. Thus, the option ‘c’ is incorrect.

Option (d):

The economy consists of how the scars recourses are allocated or managed. It is not the study of how the government can stop the harm from unchecked self- interest. Thus, the option ‘d’ is incorrect.

Concept

Concept introduction:

Economics: Economics refers to the study of how the individual, society and organization decide to allocate its limited available resource to produce finished goods and services in order to satisfy its unlimited demands.

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