The term Economics originates from the word ‘oikonomia’ meaning household Economics. Economy is thus the study of how to transform scarce resources into goods and services to satisfy our wants and how we distribute it.
This definition is still incomplete as it focuses on fixed resources. The two main concepts of modern Economics is not included in it that is.
On one side, the production capacity of modern Economics has increased tremendously. Population, labour forces, new raw materials, new plants and equipments have been increased incredibly. With education and newly acquired skills the productivity is increasing.
One another side, the demand not always remains high for goods which leads to idle workers, high supply of goods, high stock of goods, wastage, etc. which leads to decrease in output.
Economics, therefore, concerns itself not just how a nation allocates various uses to its scarce productive resources, but it also deals with the process by which the production capacity of these resources is increased with the factors that led to fluctuations in the utilisation of resources in the past.