Introduction to Economics

WHAT IS ECONOMICS?
1. Oikonomia
  1. Oikos - household
  2. Nomos - laws/management
  3. greek
  4. A social science which is concerned with the efficient use and proper utilisation of limited resources for the achievement of economic growth
    1. (i) Kautilya, Arthashastra: eco & pol activities
    2. (ii) Adam Smith, An Enquiry into the Nature and Causes of Wealth of Nation (1776): science of wealth
    3. (iv) Alfred Marshall: study of mankind in the ordinary business of life
    4. (iii) Lionel Robbins, Nature and Significance of Economics Science: study of human behaviour as a relationship between ends and scarce means which have alternative uses
WHAT IS AN ECONOMY?
1. A system which provides livelihood to the people by producing goods and services that enable them to earn their incomes
2. WHAT ARE THE TYPES OF ECONOMIES?
  1. BASED ON
    1. Means of Production
      1. CAPITALIST
        "Market Economy"
        maximise profit
        operated by market demand and supply forces w/o direct intervention of govt.
        no limit to private ownership
        UK, USA, Australia
      2. SOCIALIST
        "Planned Economy"
        maxmise social welfare
        operated by govt. w/ central planning authority
        private ownership under control of govt.
        China, Russia, Cuba
      3. MIXED
        "Dual Economy"
        govt. aim: social welfare max. private aim: profit max.
        operated by both govt. and private sector
        partly owned govt. & partly owned private
        India, Pakistan, Sri Lanka
      4. AKA
        OBJECTIVE
        OPERATION
        OWNERSHIP
        EXAMPLES
    2. Economic Development
      1. DEVELOPED
        per capita income HIGH & standard of living HIGH
        USA, Switzerland, Canada
      2. DEVELOPING
        per capita income & standard of living NOT V HIGH NOT V LOW
        India, Pakistan, Sri Lanka
      3. UNDERDEVELOPED
        per capita income is V LOW & standard of living is V LOW
        Nepal, Bangladesh, Bhutan
WHAT IS THE ECONOMIC PROBLEM?
1. PROBLEM OF CHOICE
  1. CAUSES
    1. UNLIMITED HUMAN WANTS
    2. LIMITED/SCARCE RESOURCES
    3. ALT. USES
    4. URGENCY OF WANTS
  2. ON THE BASIS OF
    1. MICROECONOMICS
      1. PROBLEM OF ALLOCATION OF RSS
        WHAT TO PRODUCE AND HOW MUCH?
        economy can't produce all and must decide: civil/military, consumer/capital
        HOW TO PRODUCE?
        which tech used: LABOUR INTENSIVE TECH/CAPITAL INTENSIVE TECH
        LIT: India uses bc labour is cheap and abundant (handloom industries)
        CIT: America uses bc capital is abundant (power loom industries)
        FOR WHOM TO PRODUCE?
        personal distribution based on income of individual
        functional distribution among owners of diff factors of production in the form of wages, rent, interest, profit.
      2. MACROECONOMICS
        branch of eco. deals w/ aggregate economic units
        determine aggregate output, national income and employment in economy
        aggregate demand and aggregate supply
        general equilibrium analysis
        aggregate demand, aggregate supply and national income
        FULLER UTILISATION OF RSS
        ltd. rss to full satisfy maximum wants, production max & wastage min
        ECONOMIC GROWTH
        investment-resources available-capacity for production. Therefore: ++investment = ++rss utilised efficiently = growth in economy
      3. branch of eco. deals w/ individual economic units
        optimum utilisation of limited rss for maximum production
        demand and supply
        deals w/ partial equilibrium analysis
        individual demand and individual supply
    2. MEANING
      1. OBJECTIVE
        DETERMINANTS
        METHOD OF STUDY
        EXAMPLE

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	Created by Grace Prince almost 7 years ago