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Principles of Economics
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 1
2026 Jan (100 marks) Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 1 Principles of Economics 2026 Jan (100 marks) Question Paper with Solutions
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Contents
The questions below are the paper as Karnataka State Law University set it at the 2026 Jan (100 marks) examination, in the order it was set.
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2026 Jan (100 marks) examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 100 · 13 questions answered
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1Explain the wealth and welfare definition of economics.[16]
Answer
For full marks, cover: the meaning of a definition of economics and why there are several; the wealth definition of Adam Smith (1776), with Mill's statement of it, its features, its merits and the attack on it; the welfare definition of Alfred Marshall (1890), with Pigou and Cannan, its features, its merits and Robbins's criticism; a table comparing the two; and a conclusion on what each contributed.
Introduction
Economics has no single agreed definition. Each definition reflects what its author thought the subject was mainly about. The two oldest are the wealth definition of the classical economists and the welfare definition of the neo-classical economists.
They came in that order for a reason. The wealth definition put wealth at the centre of the subject. Critics said this left out human beings. The welfare definition answered them by putting man first and wealth second. Understanding both, and why one replaced the other, is the core of this question.
1. The wealth definition: Adam Smith, 1776
Adam Smith, a Scottish professor of moral philosophy, published An Inquiry into the Nature and Causes of the Wealth of Nations in 1776. He is called the father of economics. The title of his book states his view: economics is the study of the nature and causes of the wealth of nations.
Smith described the aims of political economy in these words: it "proposes two distinct objects; first, to provide a plentiful revenue or subsistence for the people", and "secondly, to supply the state or commonwealth with a revenue sufficient for the public services". In short, "It proposes to enrich both the people and the sovereign."
John Stuart Mill, writing in 1848, kept the same focus. His Principles of Political Economy opens: "Writers on Political Economy profess to teach, or to investigate, the nature of Wealth, and the laws of its production and distribution." In short, the classical economists treated economics as the science of wealth.
2. Features of the wealth definition
- Wealth is the central subject. Economics studies how wealth is produced, exchanged, distributed and consumed.
- Wealth means material goods. Only tangible things, such as grain, cloth and buildings, were counted as wealth.
- Economic man. The definition assumed a person who acts only from self-interest and seeks the most wealth for himself.
- National prosperity. The aim was to find what makes a nation rich, so the study of wealth was linked to national policy.
- Laissez-faire. Smith argued that individuals pursuing their own gain serve society as if led by an "invisible hand". So the State should interfere as little as possible.
3. Merits of the wealth definition
- It made economics a separate subject. Before 1776 economic ideas were scattered across moral philosophy and politics.
- It identified a real problem. Poverty and wealth do matter to human life, and the definition studied their causes.
- It produced lasting ideas. The division of labour, the gains from exchange and the working of markets all come from this approach.
- It is concrete. Wealth can be counted, so the subject had something measurable to study.
4. Criticism of the wealth definition
- Too much importance to wealth, too little to man. Wealth was treated as the end and man as the means. In truth wealth is only a means to human welfare.
- The "dismal science" attack. Thomas Carlyle called economics "the dismal science" in 1849. John Ruskin answered the wealth view with the line "There is no wealth but life" in Unto This Last (1860). Both saw the definition as selfish and materialistic.
- Too narrow a meaning of wealth. Services were left out. On this view a teacher, a doctor and a lawyer produce nothing, which is plainly wrong.
- Economic man is unreal. People act from love, duty, custom and charity as well as self-interest.
- It ignores scarcity and choice. It does not ask how limited resources are shared among competing wants, which later became the centre of the subject.
5. The welfare definition: Alfred Marshall, 1890
Alfred Marshall, professor at Cambridge, published Principles of Economics in 1890. He moved man to the centre. In the eighth edition of 1920, his definition reads:
"Political Economy or Economics is 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." He went on: "Thus it is on the one side a study of wealth; and on the other, and more important side, a part of the study of man."
Two followers stated the same view. A.C. Pigou, in The Economics of Welfare (1920), limited the inquiry to "that part of social welfare that can be brought directly or indirectly into relation with the measuring-rod of money". He called this part economic welfare. Edwin Cannan wrote that the aim of political economy is "the explanation of the general causes on which the material welfare of human beings depends".
6. Features of the welfare definition
- Man comes first, wealth second. Wealth is studied only as a means to human welfare.
- Ordinary business of life. Economics studies how people earn a living and how they spend it, in everyday life.
- Material welfare only. Marshall spoke of the "material requisites of wellbeing", such as food, clothing and shelter.
- A social science. It studies people living in society, not a single isolated person.
- Measurable by money. Following Pigou, only welfare that can be measured in money falls within economics.
7. Merits of the welfare definition
- It made economics human. It answered Carlyle and Ruskin by treating wealth as serving life.
- It widened the subject. It studies both individual and social action.
- It gave economics a purpose. Promoting welfare gave the subject a reason to guide policy.
- It is practical. Money measurement gave the subject a working tool.
8. Criticism of the welfare definition: Lionel Robbins, 1932
- The line between material and non-material is false. Lionel Robbins attacked it in 1932. He compared the wages of a sewage collector with the wages of the members of an orchestra. Only the first work is "material", yet one theory of wages explains both.
- Services are left out. The services of a teacher, singer or lawyer are not material, yet they command a price.
- Welfare cannot be measured. Welfare is a state of mind. It differs from person to person, and money does not measure it exactly.
- Not all economic activity promotes welfare. Liquor and tobacco are produced and sold, and economics must study them.
- It makes economics normative. Deciding what promotes welfare is a value judgment. Robbins argued economics should be neutral between ends.
9. The two definitions compared
| Point | Wealth definition | Welfare definition |
|---|---|---|
| Author and year | Adam Smith, 1776 | Alfred Marshall, 1890 |
| Centre of the subject | Wealth | Man and his welfare |
| Place of wealth | An end in itself | A means to welfare |
| Point | Wealth definition | Welfare definition |
|---|---|---|
| Scope | Material goods only | Material welfare only |
| View of man | Selfish economic man | Man in ordinary business of life |
| Main critics | Carlyle, Ruskin | Robbins |
10. The lasting contribution of each
The two definitions are not simply right and wrong. Each one moved the subject forward.
- The wealth definition gave economics its subject matter. Production, exchange and distribution of goods remain the core of every syllabus. Smith's ideas on the division of labour and on markets are still taught.
- The welfare definition gave economics its purpose. It made clear that wealth matters only because it serves people. Modern welfare economics and public policy grow out of this idea.
- The criticism of both led to the scarcity definition. Robbins kept the study of choice and dropped the line between material and non-material goods.
Conclusion. The wealth definition of Adam Smith made economics a science of wealth and gave it its subject matter. It failed because it placed wealth above man and ignored services. The welfare definition of Alfred Marshall corrected this by making economics a study of mankind, with wealth only a means to material welfare. It in turn failed because the line between material and non-material welfare cannot be drawn and welfare cannot be measured. Each definition is best seen as a step. Smith gave the subject its content and Marshall gave it a human purpose. Robbins's scarcity definition of 1932 built on the faults of both.
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