Economics Concepts and Theories

A colonial economy is specifically structured to extract resources and serve the economic interests of the colonizing power rather than the local population.

A false economy occurs when an item is purchased because it is cheap, but it requires frequent replacement or repair, making it more expensive in the long run.

Prosperity is the state of being successful, flourishing, or wealthy. Losing money is the opposite, and being proper relates to behavior rather than financial status.

Economics laws are based on various assumptions which are necessary to follow while applying the law is as well as these laws can be applied only is some specific situation with given set of conditions. Moreover,  these economic laws are not rigid statements but their application depends upon the tendency of their implementation. Therefore, all of the above can be regarded as economic laws. 

Dr. Amartya Sen, an Indian Economist, won the Noble Prize for economics in 1998 for welfare economics and social choice theory. He had an interest in the lives of the poorest section of the society. He worked on human rights, poverty and inequality and tried to improve the well-being of the community.

Modern economists define economics as the science of growth and efficiency as in the contemporary world economics focuses the rate of growth and how much the scarce resources are efficiently  used,that is, without wastage in order to derive the maximum utility.

• Adam Smith was a Scottish economist who described economics as a science which deals with the creation of wealth where wealth generation focused on the personal gains of the individual which was more of capitalist economy.
  
• Alfred Marshall was a British economist who proposed the definition of welfare according to which material welfare focused on the materialistic gains in the economy.
  
• Paul A Samuelson was an American economists who proposed many theories on income and its even distribution and how these two factors leads to growth and development of the nation. Development and growth is the modern macroeconomics which focuses on personal gain with social welfare.
  
• Lionel Robbins was a British economist who proposed a very scientific definition on  economics where he described the importance of effective relationship between scarcity and choice is the modern microeconomics which focuses on unlimited wants and scarcity of resources.
  

Economics is the study that establishes an effective relationship between unlimited wants and scarce resources so that all the unlimited wants are mostly satisfied by the use of scarce resources. 
At micro level it deals with individual variables like consumer or producer and how they influence the market. 

An economy must allocate resources between current consumption and investment (saving) to ensure future growth. Spending all resources on current consumption would leave nothing for capital formation, which is unsustainable.

The economic problem arises because human wants are unlimited while resources are limited. Even if resources were abundant, the problem of choice would persist as long as wants remain unsatisfied.

Relative poverty refers to a standard of living compared to the economic standards of the rest of the population in a specific society. This concept is typically applied in developed countries where absolute poverty is less prevalent.

Frank Knight's theory of profit specifically identifies profit as the reward for bearing uninsurable risks or uncertainty.

J.B. Clark is widely recognized for developing the Dynamic Theory of Profit in his 1900 work, The Distribution of Wealth. This theory posits that profit arises specifically from the dynamic changes in an economy, such as shifts in population or technology, rather than from static conditions.

F.B. Hawley proposed the Risk Bearing Theory of Profit in his 1907 work, Enterprise and the Productive Process. He argued that profit is the reward for the entrepreneur's willingness to bear the risks inherent in business.

John Maynard Keynes introduced the concept of liquidity preference in his book, The General Theory of Employment, Interest and Money, identifying three specific motives: transactions, precautionary, and speculative.