SCOPE OF ECONOMICSScope means Province or field of study. In discussing the scope of economics, we have to indicate whether it is a science or an art and a positive science or a normative science. It also covers the subject matter of economics.I) ECONOMICS - A SCIENCE AND AN ARTa) Economics is a science:A subject is considered science if It is a systematised bodyof knowledge which studies the relationship between cause and effect. It is capable of measurement. It has its own methodological apparatus. It should have the ability to forecast. If we analyse !conomics, we find that it has all the features of science Economics studies cause and effect relationsi!. !g" the law of demand. It e#plains the cause and effect relationshipbetween price and demand for a commodity. It says, given other things constant,as price rises, the demand for a commodity falls and vice versa. $ere the cause is price and the effect is fall in %uantity demanded. Economicsis ca!a"le of "ein# measured$!g" It has its own methodology of study &induction and deduction' and it forecasts the future market condition with the help of various statistical and non(statistical tools.Tus% economics is a science.") Economics is also an art . Art is nothing but practice of knowledge. )hereas science teaches us to know art teaches us to do. *nlike science which is theoretical, art is practical. If we analyse !conomics, we find that it has the features of an art also. Its various branches, consumption, production, public finance, etc. provide practical solutions to various economic problems. Science and art are complementary to each other and economics is both a science and an art. Thus, Economics is both a science and an art. It is science in its methodology andart in its application.ii)IS ECONOMICS POSITI&E SCIENCE OR NORMATI&E SCIENCE'a)Economics is a Positi(e Science: A Positive science is that Science in which e#actness of the subject is studied. Almost all the classical economists declared that science of economics should be concerned only with +)hat is +and not what ought to be. ,hey said that, !conomics should not e#plain rightness or wrongness of things and should not pass any moral judgement. !g" -ionel .obbins reaffirmed the view that economics is notin# "ut a !ositi(e science. According to .obbins / !conomics is neutral between ends. It does not pass value judgments. Anyone with the limited amount of money may use it for buying li%uor and not milk.Ar#uments in fa(our of Economics as a Positi(e Science:a. 0ore -ogicalb. 0ore !fficiencyc. 0ore uniformityd. 0ore 1eutralitye. 2ormulation of ,heories")Economics as a Normati(e science: 1ormative science makes distinction between good and bad. It prescribes what should be done to promote human welfare.A positive statement is based on facts and a normative statement involves ethical values. 2or e#ample"34 per cent of the labour force in India was unemployed last year is a positive statement, which could is verified by scientific measurement. 345 unemployment is too high is normative statement. comparing the fact of 34 percent unemployment with a standard of what is unreasonable. It also suggests how it can be rectified. Tus economics is a normati(e science$Ar#uments in fa(our of Normati(e Economics:a. 0ore Practical.b. 0ore .ealistic.c. *seful Science.d. 0a#imum )elfare.e. 6rowth/7riented.Therefore, economics is a positive as well as normative science.MET)OD OF ANA*+SIS:In the field of economic analysis, there are two important methods useful for investigation and formulation of its principles, laws, generali8ations or theorems. ,hey are 3. ,he deductive method and 4. ,he inductive method.,) DED-CTI&E MET)OD: ,he deductive method is also called the abstract, analytical or a priori method. In this method, we start from a few indispensable facts and after making certain assumptions, through logical reasoning, certain conclusions are reached. It consists of three important stages, namely &i' observation, &ii' logical reasoning, and &iii' inference and testing by means of further observations. 9eductive reasoning provides us with hypothesis which are tested and verified with relevance to facts and figures and then we draw valid economic laws. In economics we start with simple premises and step by step work up to more comple# and refined hypothesis. In this method, we descend from the general to the particular.MERITS:3. It is simple and logical.4. It does away with the need for e#perimentation.:. It leads to accuracy in generalisation due to logical reasoning.DEFECTS:3. If assumptions made are wrong, generali8ations made on the basis of wrong assumptions will also be invalidated.4. ,here is too much abstraction and economists through their intellectual e#ercise give rise to only ;intellectual toys; without any reality.:. 6enerali8ations of deduction based on wrong premises may become dangerous..) Induction Metod: ,he inductive method is also known as the empirical method. It derives economic generali8ations based on e#perience and observations. In this, data are collected with reference to certain economic phenomena and finally generali8ations are derived from the collected data and observations.Merits of te inducti(e metod:3. It leads to precise, measurable conclusions.4. It is highly practical and realistic.:. It is helpful in verifying the conclusions of the deductive method.