EconomicsISC Class 11 · Introduction to Economics

Definitions of Economics, Micro and Macro Economics (ISC Class 11)

Updated 17 October 2026 · Fact-checked

Adam Smith defined economics as the science of wealth, Alfred Marshall as the study of mankind in the ordinary business of life, concerned with material welfare, Lionel Robbins as the science that studies human behaviour as a relationship between ends and scarce means which have alternative uses, and Paul Samuelson as the study of how societies use scarce resources to produce goods over time and distribute them. Microeconomics studies individual units; macroeconomics studies the economy as a whole.

Notice how the focus moves from wealth to welfare to scarcity to growth, and that micro looks at single units while macro looks at the whole economy.

Illustration drawn for QuestionBuddy.

Understand Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics

Wealth definition (Adam Smith). Economics is the science of wealth: how a nation becomes rich. *Merits:* focused attention on production and growth. *Criticism:* too narrow; ignores human welfare; treats wealth as an end instead of a means; neglects services and non-material goods.

Welfare definition (Alfred Marshall). Economics studies mankind in the ordinary business of life; it examines the part of individual and social action closely connected with attaining and using the material requisites of well-being. *Merits:* human welfare is the centre. *Criticism:* limited to material welfare; excludes non-material goods and services; difficult to define welfare and measure it; the classification of activities into welfare and non-welfare is artificial.

Scarcity definition (Lionel Robbins). Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. *Merits:* wide, analytical, universal and neutral between ends. *Criticism:* ignores welfare and growth; rules out ethics (economics seen as a positive science only); the concept of scarcity is vague.

Growth definition (Paul Samuelson). Economics is the study of how societies use scarce productive resources, with or without money, to produce various commodities over time and distribute them for consumption now or in the future among various persons. *Merits:* includes growth, dynamics, choice and distribution. It is considered the most complete modern view.

Micro and macro economics.

Basis	Microeconomics	Macroeconomics
Subject	Individual units: consumers, firms, markets	The economy as a whole
Examples	Price of a good, consumer demand, cost	National income, inflation, unemployment
Tool	Demand and supply	Aggregate demand and supply
Aim	Optimum allocation of resources	Full employment and growth

Positive and normative economics. Positive: what is (facts); normative: what ought to be (value judgments).

Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics: key facts

Definitions: Smith wealth
Marshall welfare
Robbins scarcity
Samuelson growth; Four approaches.
Robbins elements: Unlimited wants
Scarce means
Alternative uses
Choice; Four elements.
Macro aggregates: National income
Price level
Employment
Growth; Macroeconomic variables.

Smith	wealth
Marshall	welfare
Robbins	scarcity
Samuelson	growth

How to answer Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics questions

Write the definition, merits and criticisms for each approach.

1State the definition in the economist's sense.
2Give one or two merits.
3Give criticisms that led to the next definition.
4For micro versus macro, name the unit studied and an example.

Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics 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.

Micro vs macro

Suppose a newspaper reports (a) the price of onions rising in a town, (b) the national inflation rate, and (c) the output of one steel firm.

Classify each as micro or macro.

Try it first, then show the solutionSolution

(a) Price of a single good: micro.
(b) National inflation: macro.
(c) A single firm's output: micro.

Answer: (a) micro, (b) macro, (c) micro.

Memory hook: Micro: one unit. Macro: the whole.

Tricks to remember Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics

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

S-M-R-S
Smith, Marshall, Robbins, Samuelson: wealth, welfare, scarcity, growth.
Use it when: Order.
WWSG
Wealth, Welfare, Scarcity, Growth.
Use it when: Definitions.
Micro = small
Micro studies small units.
Use it when: Micro vs macro.

Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics: solved examples

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

Example 1: Definition · 1 mark · MCQBoard level

Economics is the science of wealth. This definition is given by:
(a) Marshall (b) Robbins (c) Adam Smith (d) Samuelson

Try it first, then show the solutionSolution

The wealth definition belongs to Adam Smith.

Answer: (c) Adam Smith

Example 2: Criticism of Marshall · 3 marks · Short answerBoard level

State three criticisms of Marshall's welfare definition. (3 marks)

Try it first, then show the solutionSolution

Limited to material welfare.
Welfare is hard to define and measure.
Excludes non-material services and activities.

Answer: It is limited to material welfare, welfare is hard to define and measure, and it excludes non-material activities.

Example 3: Compare the definitions · 4 marks · Short answerHarder board level

Compare the scarcity definition of Robbins with the welfare definition of Marshall on four points. (4 marks)

Try it first, then show the solutionSolution

Subject: ends and scarce means vs material welfare.
Scope: all human behaviour vs only welfare activities.
Nature: analytical, neutral vs classificatory and ethical.
Criticism: ignores growth and welfare vs limited to material welfare.

Answer: Robbins treats economics as the study of choice with scarce means, wide, analytical and neutral; Marshall limits it to material welfare activities. Robbins is criticised for ignoring welfare and growth; Marshall for narrowness.

Example 4: Micro or macro · 5 marks · Short answerHarder board level

Classify with reasons: (i) the demand for tea at different prices; (ii) the level of national income; (iii) the profit of a bakery; (iv) the unemployment rate of the country; (v) the effect of an increase in a household's income on its spending. (5 marks)

Try it first, then show the solutionSolution

(i) Micro: one commodity.
(ii) Macro: aggregate.
(iii) Micro: one firm.
(iv) Macro: economy-wide.
(v) Micro: one household.

Answer: (i) micro; (ii) macro; (iii) micro; (iv) macro; (v) micro.

Example 5: Which definition? · 4 marks · Short answerHOTS / competency

A student says: "Robbins' definition is better because it is wider, so it makes Samuelson's unnecessary." Evaluate this using the features of the Samuelson definition and a specific issue such as a country choosing between present consumption and investment. (4 marks)

Try it first, then show the solutionSolution

Robbins covers scarcity and choice but is static: it does not deal with growth over time.
Samuelson adds time and growth: using resources now for production in the future.
The choice between consumption and investment is a question about growth and time, which Samuelson's definition covers.
So Samuelson's adds to, not replaces, Robbins'.

Answer: Samuelson's definition extends Robbins' by adding time, growth and distribution; it handles problems like present consumption versus investment, so it is not unnecessary.

Where students lose marks in Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics

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

Mistake: Mixing authors and definitions
Memory.
Wrong working
Marshall: scarcity definition
Right working
Marshall: welfare; Robbins: scarcity
Do this: Learn the order S-M-R-S.
Usually costs: 1-2 marks.
Mistake: Giving merits only
Incomplete answer.
Wrong working
Merits only
Right working
Merits and criticisms
Do this: Cover both.
Usually costs: 1 mark.
Mistake: Placing inflation under micro
Misclassifying.
Wrong working
Inflation is micro
Right working
General inflation is macro
Do this: Aggregates are macro.
Usually costs: 1 mark.

Exam tips

Write the author's name with the key word of the definition.
Add one criticism for each definition.
Use a table for micro versus macro.

Practice questions on Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics

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 economist defined economics as a relationship between ends and scarce means that have alternative uses?
(a) Smith (b) Marshall (c) Robbins (d) Keynes
Hint
Scarcity.
Answer
(c) Robbins
Q2 · 3 marks · Short answerBoard level
Distinguish between positive and normative economics with an example of each. (3 marks)
Hint
What is vs what ought to be.
Answer
Positive economics deals with facts (the price of petrol rose 8%); normative economics deals with value judgments (petrol should be cheaper).
Q3 · 4 marks · Short answerHarder board level
Explain the main merits and criticisms of the wealth definition of Adam Smith. (4 marks)
Hint
Wealth as end.
Answer
Merit: it focused on production and national prosperity. Criticisms: too narrow, it neglected human welfare and services, treated wealth as an end and not as a means to welfare.
Q4 · 5 marks · Long answerHarder board level
List four differences between microeconomics and macroeconomics and give one policy question studied by each. (5 marks)
Hint
Subject, aim, examples, tool.
Answer
Subject: micro studies individual units such as consumers, firms and markets; macro studies the economy as a whole and its aggregates. Aim: micro aims at efficient (optimum) allocation of resources; macro aims at full employment and growth. Examples: micro covers the price of a good, consumer demand and cost; macro covers national income, inflation and unemployment. Tool: micro uses demand and supply; macro uses aggregate demand and supply. A micro policy question: the effect of a tax on cigarettes on their price. A macro policy question: how to reduce inflation.
Q5 · 4 marks · Short answerHOTS / competency
The government raises the tax on sugary drinks. Discuss one micro and one macro effect, and say whether each statement is positive or normative: (a) "Sales of the drinks fall by 12%". (b) "The tax is unfair to the poor." (4 marks)
Hint
Facts vs value judgments.
Answer
Micro: the price and quantity of sugary drinks change. Macro: total tax revenue and the price level may be affected slightly. (a) is a positive statement; (b) is normative.

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.Wealth definition by?Show answer
Adam Smith.
2.Welfare definition by?Show answer
Alfred Marshall.
3.Scarcity definition by?Show answer
Lionel Robbins.
4.Growth definition by?Show answer
Paul Samuelson.
5.Macro studies?Show answer
The economy as a whole.

Definitions of Economics: Smith, Marshall, Robbins, Samuelson, and Micro and Macro Economics: frequently asked questions

Is Robbins' definition neutral to ends?

Yes, it does not judge ends.

Is national income micro?

No, macro.

Is economics a science?

It uses scientific methods; also an art.

Which definition is the most complete?

Samuelson's growth definition is wider.