B.A. LL.B. (Five Years) Sem 2 Economics I (old course) 2012 Jun Question Paper with Solutions

2. Means are scarce. Time, money and resources are limited compared with wants.
3. Means have alternative uses. A rupee, an hour or a hectare can be used in more than one way, so using it one way means giving up another.

From these follows choice: every person and society must decide which wants to satisfy and which to leave. Economics, for Robbins, is the science of choice.

2. Merits of the scarcity definition

1. It is analytical. Robbins called the earlier welfare definition "classificatory", because it sorted activities into economic and non-economic. His own he called "analytical", because it picks out an aspect of all behaviour, the aspect of choice.
2. It is universal. Scarcity and choice apply to a household, a firm, a government, a capitalist or a socialist economy, and to rich and poor countries alike. Even the richest country cannot satisfy every want.

3. It ignores unemployment. In a slump, workers and machines lie idle. Resources are then not scarce but unused. The Great Depression showed this, and Keynes's General Theory (1936) dealt with it. The scarcity definition has little to say about it.

4. Too wide and too narrow. It is too wide because almost every human choice involves scarce time, so economics seems to cover everything. It is too narrow because it leaves out macro questions, such as national income and employment.

5. It makes economics a science of choice only. In many societies, choices are shaped by custom, law and the State, not by free individual decision.

6. It is abstract. By dropping the human focus of Marshall, it made economics seem a matter of logic rather than of people's lives.

7. Ends and means are not always separate. A degree is an end for a student but a means to a job. Health is an end in itself and also a means to work. Robbins's neat division between ends and means does not always hold.

4. Production and distribution: it asks for whom output is produced, bringing back the question of distribution.
5. Now and in the future: choices between present and future consumption, that is, saving and investment.

Why it is better.

1. It adds growth, which matters most to developing countries.
2. It includes distribution among persons and groups.
3. It covers both micro choice and macro problems of the whole economy.
4. It is dynamic, not static.

Its limits. It is long and loose, and it keeps Robbins's neutrality between ends. It also says little about unemployment as such.

5. Comparison

7. An Indian illustration

A State government has Rs 1,000 crore. On Robbins's view, economics studies how it chooses between irrigation and schools, given that the money is scarce and has alternative uses. On Samuelson's view, economics also asks how that choice will raise output in future years. It asks too how the gains will be shared between farmers, students and taxpayers. The second view fits the problems of a growing economy better, because it looks beyond this year's budget.

Conclusion. Robbins's scarcity definition made economics the science of choice between scarce means with alternative uses. It is analytical, universal and neutral, and it widened the subject beyond material welfare. Critically examined, it is too neutral about ends and ignores growth and unemployment. It is also both too wide and too narrow. Samuelson's growth-oriented definition keeps scarcity and choice but adds growth over time, distribution among groups and the choice between present and future. That makes it the most complete of the definitions, and the one most useful to a developing economy like India.