The scope of economics involves the range or coverage of activities in economics as a discipline. By implication, it leads to the subject matter of economics, considering whether economic falls within scientific or humanity discipline and examine whether economic analysis positive or normative statement. This discussion should bring about the areas of specialization or study in economics.
On the subject matter of economics by and large, the formulation of a definition is a concise method of clarifying the subject matter in a field of study. The scarcity definition given by Lionel Robbins has sharpening defined the scope of economics, it has delimited the field of economics by building a boundary wall around it. There can now be no misconception or confusion about the sphere of economics. Any problem marked by scarcity of means and multiplicity of ends becomes ipso facto (an economic problem) and as such a legitimate part of the science of economics.
This is because economics is concerned with a special aspect of human behavior which is allocating scarce means among competing ends. Consequently, the subject matter of economics includes the problem of managing the allocation of scarce resources by household, business firm and the government in the administration of public resources.
Thus, the subject matter of economics includes solving the scarce resource allocation problem in consumption by the households, production by firm, government budgetary processes and the attendant issues of price determination, wealth distribution, employment, unemployment, poverty, inflation, economic growth etc. in order to organize the ever-expanding scope of economics. The area of study in economics have been divided broadly into two areas. (For ease of analysis).
These two form an economic theory
The methodological tools are scientific tools. The tools of analysis in economics are purely scientific.
Systematize Body of Knowledge: they are validated and it has been included in a body of knowledge.
Peculiar Laws of Theory: there are theories found find in economics that can’t be found anywhere. As we have theories in law, medicine, Agricultural Science, Chemistry etc. we also have it in economics which make it to have it peculiarity.
Testable Hypothesis: hypothesis are statements of fact that need to be subjected to experiment. E.g. Leadership is the main course of youth unemployment in Nigeria. We use tools to measure the statement, collect data on it. It may be accepted based on research or may be rejected based on a testable hypothesis.
Ability to make prediction: after testable hypothesis we can predict what will happen after our experiment.
Self-Corrective: we can modify a particular policy that is failing. If there is one deficiency in a knowledge today, we can work on it to improve it.
Universal Validity: economic principle is acceptable all over the world. An idea may not work because of the nature of the people, not as a result of a tested principle.
Positive Economics: it is an aspect of economics that is purely objective. For instance, if you increase the price of a commodity, the demand of such commodity will reduce. That is an example of positive Economics because it is measurable.
Normative Economics: is value laying, it is subjective, it is informed by personal opinion and suggestions. We have normative statement because economics deals with human being.
For example,
The methodology of a discipline refers to basic approach commonly used in knowledge creation in that discipline. Common approaches in knowledge creation are:
