Beruflich Dokumente
Kultur Dokumente
ECONOMICS: AN
INTRODUCTION
Achala Dadhichi
1
WHY STUDY ECONOMICS?
2
6.TO LEARN A PARTICULAR WAY OF THINKING
Developments in the country make
modern society more complex,
therefore increases the need for man
to study economics in order to
efficiently solve his own economic
problems brought by these
complexities.
7. Asks how government policies can be
used to pursue important goals such
as rapid economic growth, full
employment, price stability.
3
8.TO BE AN INFORMED VOTER:
Economics helps us make wise
decisions especially in choosing
political figures who can efficiently
use taxes for the benefit of the
people.
4
MEANING OF ECONOMICS
5
Stages & Definitions of
Economics
6
1. WEALTH CONCEPT
7
2. WELFARE CONCEPT
According to Alfred Marshall
8
3. SCARCITY CONCEPT
9
CHARACTERISTICS OF SCARCITY ORIENTED
DEFINITION
Economics is a positive science.
# Scarce means.
10
4. GROWTH/DEVELOPMENT CONCEPT
According to Prof. Samuelson
“Economics is the study of how men and society
choose with or without the use of money, to
employ the scarce productive resources which
have alternative uses, to produce various
commodities over time and distribute them for
consumption now and in future among various
people and groups of society”.
11
KEY DEFINITIONS
Labor Capital
Land Entrepreneurship
Product
Resources, also called factors of
production, are all the inputs or things used
in producing goods and services. They fall
into four categories:
land
labor
capital
entrepreneurship
Slide 1 of 3
Land refers to anything below & above
the earth provided by nature or Earth's
natural resources. It can be oil,
mineral,fishes,fossel,fuels,rivers,lakes,
air,forest etc.
Labor refers to all physical & mental
abilities made available for production
of goods & services, usually measured
by the time spent in working, during a
period of time.
Slide 2 of 3
Capital-Produced means of production. All man-
made aids which are used up in the process of
making other goods & services rather than being
consumed for their own sake are known as
capital. It includes all types of tools
machineries,equipments,factory-buildings;
infrastructure, such as roads, ports, sanitation
facilities, and utilities.
Entrepreneurship refers to the skills of people
who are willing to risk their time and money to
combine all factors of production & run a
business.
Slide 3 of 3
What Is an Economy?
• How to produce ?
• What technique of production should be used - Labor intensive or
capital intensive
Growth of Resources
• Resources can increase if there is:
1. An increase in the quantum of resources
• Increase in labor
2. Improvement in productivity
• Unlimited wants
• Scarce resources
• Land
• Labor
• Capital
- Sandwich
Resource - Vegetables
Alternate uses
- Salad
HOW DO PEOPLE CHOOSE ?
• Rank their choices based on the satisfaction
derived
• Prioritization of wants
Sheela’s ranking of the available uses for her pocket money
Uses Level of satisfaction
a. Buy gifts and cards Highest
b. Eat out with friends Just below (a)
c. Buy music cassettes Just below (b)
d. Purchase of shoes Just below (c)
e. Purchase of T-shirts Lowest
29
DEFINATION :
30
SUBJECT-MATTER :
32
MEANING :
33
DEFINATION :
MICROECONOMIC MACROECONOMIC
QUESTION QUESTION
Go to business How many people are
school or take a job? employed in the
economy as a whole?
What determines the What determines the
salary offered by overall salary levels
Citibank to Aditya, a paid to workers in a
new Sharda Univ given year?
MBA?
MICROECONOMICS AND MACROECONOMICS
38
POSITIVE
VS.
NORMATIVE
ECONOMICS
“A positive science may be defined
as a body of systematized
knowledge concerning what it is;
normative science as a body of
systematized knowledge relating to
criteria of what ought to be; and
concerned with the ideal as
distinguished from the actual….
POSTIVE ECONOMICS
• Objective
• Fact based
• Deals with cause-effect
relationship that…
• Can be tested
• Can be proved or disproved
• The word positive here means-----
What is?
NORMATIVE ECONOMICS
• Subjective
• Value-based
• Opinion-bases: cannot be proved or
disproved.
• Describes ‘what ought to be’
• Not testable
• Also known as POLICY ECONOMICS
• We express our judgement about what
is good or bad ;what is desirable or
undesirable; right or wrong.
Examples of positive statements-