Question

Explain the features of Adam Smith’s definition of economics.

Answer 1

The features of Adam Smith’s definition of economics, where he defined economics as the “science of wealth,” are as follows:

1. Study of Wealth: Economics is primarily concerned with the study of wealth. According to Adam Smith, the main subject matter of economics is the nature and causes of a nation's wealth.
2. Focus on Material Goods: The study is limited to material goods only, tangible, scarce, and useful goods such as tables, chairs, and books. Non-material goods like services were not included in this definition.
3. Economic Man: The definition emphasizes the concept of the “economic man,” a person who acts out of self-interest and engages in economic activities to maximize his own wealth.