EconomicsICSE Class 9 · Introduction to Economics

Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities (ICSE Class 9)

Updated 18 October 2026 · Fact-checked

Economics is defined differently by four thinkers: Adam Smith by wealth, Robbins by scarcity and choice, Keynes by income and employment, and Samuelson by choice, growth over time and distribution. Micro economics studies individual units such as one household or firm; macro economics studies the economy as a whole through totals such as national income and the general price level. Economic activities are done to earn money, non-economic activities out of love, duty or pleasure.

Understand Four Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities

Four definitions.
1. Adam Smith (wealth definition): his book of 1776 treats economics as the study of how a nation produces and increases its wealth. Key idea: wealth. Criticism: it places wealth above human welfare. He is called the father of economics.
2. Lionel Robbins (scarcity definition, 1932): economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. Key ideas: ends (wants) are unlimited, means (resources) are scarce, and means have alternative uses, so choice is necessary.
3. J. M. Keynes (income and employment approach, 1936): economics studies what decides the total level of income, output and employment of an economy. Key idea: the economy as a whole, the start of modern macro economics.
4. Paul Samuelson (growth definition): economics studies how people and society choose, with or without money, to use scarce productive resources with alternative uses to produce commodities over time and distribute them for consumption among persons and groups, now or in future. Key ideas: scarcity and choice, time (growth) and distribution.

Micro and macro economics.

Micro economics studies individual units: one consumer, household, firm or industry and the price of one product (the demand for tea).
Macro economics studies aggregates: national income, total employment, the general price level, total saving and investment (unemployment in India, the rate of inflation).
Points of difference: scope (a part versus the whole), central problem (price of a product and allocation of resources versus national income, employment and price level), tools (individual demand and supply versus aggregate demand and supply). Example: the price of rice is micro; the general price level is macro.

Economic and non-economic activities.

Economic activities are done to earn money or to produce goods and services with a money value (a farmer growing wheat for sale, a teacher on a salary).
Non-economic activities are done out of love, social duty, religion or recreation, not for money (a mother cooking for her family, volunteering at a temple kitchen).
Differences: motive (earning or producing for the market versus love, duty or pleasure), money value (economic activities are measured in money and counted in national income) and result (income and wealth versus satisfaction only).
The same act can be either; the motive decides the type.

Neighbouring topics: wants, goods, utility, wealth and the four entities are on the next page of this chapter.

Four Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities: key facts

Robbins: Unlimited ends
scarce means
alternative uses
so choice; Science of choice under scarcity.
Four key ideas: Smith wealth
Robbins scarcity
Keynes income and employment
Samuelson growth over time; Name the economist and the idea.
Micro versus macro: Micro: individual units, one price | Macro: aggregates, national income, price level, employment; Part versus whole.
Economic activity test: Motive is earning money or producing for the market | non-economic: love, duty, pleasure; The motive decides.

Smith	wealth
Robbins	scarcity
Keynes	income and employment
Samuelson	growth over time

Four Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Same act, two types

Suppose Radha sells her paintings at an exhibition for money and also paints a wall mural free of cost at a village school.

Classify both and state the test used.

Try it first, then show the solutionSolution

Selling paintings for money is done to earn income: an economic activity.
The free mural is done out of social duty and earns no money: a non-economic activity.
The test is the motive, not the act.

Answer: Selling paintings is economic and painting the mural free is non-economic; the motive decides.

Memory hook: Motive decides the type.

Tricks to remember Four Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities

Short memory aids. Say each one aloud once, then use it on a question the same day.

S-R-K-S
Smith wealth, Robbins scarcity, Keynes employment, Samuelson growth.
Use it when: Order of definitions.
Micro is a leaf, macro is the forest
Micro looks at one unit; macro looks at the whole economy.
Use it when: Micro versus macro.
Money motive
If the act is done to earn, it is economic.
Use it when: Classifying activities.

Four Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Scarcity definition · 1 mark · MCQBoard level

The definition that speaks of "ends and scarce means which have alternative uses" was given by:
(a) Paul Samuelson (b) Adam Smith (c) Lionel Robbins (d) J. M. Keynes

Try it first, then show the solutionSolution

Scarce means with alternative uses is the idea of Robbins.

Answer: (c) Lionel Robbins

Example 2: Classify the activities · 3 marks · Short answerHarder board level

Classify each as economic or non-economic with a reason: (i) a baker sells bread in his shop; (ii) friends cook together for a picnic; (iii) a retired teacher gives free lessons to the children of her street; (iv) a tutor teaches for a monthly fee.

Try it first, then show the solutionSolution

(i) Economic: the bread is sold for money. (iv) Economic: the tutor earns a fee. (1 mark)
(ii) Non-economic: done for pleasure with no income. (1 mark)
(iii) Non-economic: done out of goodwill and social duty without payment. (1 mark)

Answer: (i) economic (ii) non-economic (iii) non-economic (iv) economic

Example 3: Correct the statement · 3 marks · Short answerHarder board level

A student writes: "Robbins defined economics as the study of wealth." Correct the statement, name the economist who gave the wealth definition and state one criticism of it.

Try it first, then show the solutionSolution

Robbins defined economics in terms of scarcity: human behaviour as a relationship between ends and scarce means having alternative uses. (1 mark)
The wealth definition was given by Adam Smith. (1 mark)
Criticism: it puts wealth above human welfare. (1 mark)

Answer: Robbins: scarcity. The wealth definition is Adam Smith's; it is criticised for putting wealth above welfare.

Example 4: Case study: micro or macro · 4 marks · Case-basedHOTS / competency

Suppose a news bulletin reports: (A) the price of one brand of tea rises; (B) the general price level of the country rises by 6 per cent; (C) total employment in the country falls; (D) a textile firm increases its output.
(i) Classify A, B, C and D as micro or macro. (2)
(ii) Name the economist whose approach gave rise to the study of items B and C. (1)
(iii) State one point of difference between micro and macro economics. (1)

Try it first, then show the solutionSolution

(i) A and D deal with a single product or firm: micro. B and C deal with the whole economy: macro.
(ii) J. M. Keynes, whose income and employment approach started modern macro economics.
(iii) Micro studies individual units; macro studies aggregates such as national income and the general price level.

Answer: (i) A micro, B macro, C macro, D micro (ii) Keynes (iii) part versus whole

Example 5: Robbins in a situation · 3 marks · Short answerHarder board level

Suppose a village has Rs 10,000 to spend on either a water pump or a community hall, but not both. Which three features of Robbins' definition are seen here?

Try it first, then show the solutionSolution

Ends are unlimited: the village wants both and more. (1 mark)
Means are scarce: only Rs 10,000 is available. (1 mark)
The money has alternative uses, so the village must choose one. (1 mark)

Answer: Unlimited ends, scarce means and alternative uses lead to choice.

Where students lose marks in Four Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities

The slips examiners see most often, and what to write instead.

Mistake: Giving the definition without the economist
The name is forgotten.
Wrong working
Economics is the study of wealth.
Right working
Adam Smith: economics is the study of wealth.
Do this: Attach the name to the key idea.
Usually costs: 1 mark
Mistake: Classifying by act, not motive
The same act can be either.
Wrong working
Cooking is always non-economic
Right working
Cooking for wages is economic; cooking for the family is non-economic
Do this: Ask why it is done.
Usually costs: 1 mark
Mistake: Calling a price micro or macro randomly
Scope is not checked.
Wrong working
Price level is micro
Right working
General price level is macro; the price of one product is micro
Do this: Check the scope.
Usually costs: 1 mark

Exam tips

Write the economist, the book or year where known, the key idea and one criticism or example.
For differences, use matching pairs on the same point.
Always add an example for micro and macro.
Say the motive decides the activity type.

Practice questions on Four Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
Which of the following is a topic of macro economics?
(a) the price of wheat (b) national income (c) a firm's profit (d) a consumer's demand for tea
Hint
Think of totals.
Answer
(b) national income
Q2 · 1 mark · Very short answerBoard level
Name the economist who studied the determinants of income and employment in an economy.
Hint
Think of the 1936 book.
Answer
J. M. Keynes
Q3 · 3 marks · Short answerHarder board level
A student says "inflation is a micro economics topic because prices are involved". Do you agree? Give a reason.
Hint
Which price is meant?
Answer
No. Inflation is a rise in the general price level of the whole economy, an aggregate, so it belongs to macro economics. The price of one product is micro.
Q4 · 3 marks · Short answerHarder board level
Explain the three ideas in Robbins' definition with one example each.
Hint
Ends, means, alternative uses.
Answer
Unlimited ends: a family always wants more things. Scarce means: its income is limited. Alternative uses: Rs 1,000 can buy books or a cricket bat, so the family must choose.
Q5 · 3 marks · Short answerHOTS / competency
Samuelson's definition is said to add time to the idea of scarcity and choice. Explain this with a suitable situation.
Hint
Think of the present and the future.
Answer
Samuelson speaks of using scarce resources to produce goods over time and to distribute them for use now or in the future. Suppose a government can use scarce funds for current consumption or for building factories that raise future output; the choice is spread over time, which shows growth, an idea absent from Robbins' definition.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Who is called the father of economics?Show answer
Adam Smith.
2.Key idea of Robbins' definition?Show answer
Scarcity and choice.
3.Whose approach started modern macro economics?Show answer
Keynes.
4.Give one micro example.Show answer
The demand for tea.
5.Give one macro example.Show answer
The rate of inflation.
6.What decides whether an activity is economic?Show answer
The motive.

Four Definitions of Economics, Micro and Macro Economics, Economic and Non-Economic Activities: frequently asked questions

Why does the syllabus write "Adams"?

It is a spelling in the syllabus text; the economist is Adam Smith.

Is a doctor treating her own child an economic activity?

No, it is done out of love and earns no income.

Do I need dates for the definitions?

Quote the dates given in your textbook; the key idea matters most.