Traditional and modern approaches of economics

Traditional and modern approaches of economics 1. Traditional Approach Traditionally , the subject matter of economics can be studied under four divisions . These are consumption, production, exchange, and distribution. Consumption It means the use of wealth to satisfy innumerable wants. It also means the destruction of utility. All the goods that are produced are consumed immediately or sometime in the future. Through the consumption activity, we use utilities hence consumption represents using up of utilities. Production It is an activity that helps to create utility . It simply means the addition of utilities. Hence production is defined as the creation of utility. Through the process of producing one set of goods is transformed into the other. In the economic sense, the mere creation of utilities is not treated as production, and in fact, the goods that are produced should have value too. In the production process, inputs or resources are transformed into products. Exchange The wo...