INTRO TO ECONOMICS

START OF THE  ECONOMICS

We have to perform various and varied activities throughout the day. Have you ever thought the ultimate end of you studies. If this question is asked from the students of class XII, they may probably answer that they want to be a doctor, an engineer, a chartered accountant, an artist, a teacher, a businessman or an economists etc. All the students may not attain their objectives. After their studies some of them may remain unemployed or underemployed and others may be suitably employed. In case, the individuals are physically and mentally fit, they try to establish themselves in certain business, profession or employment. After attaining adulthood, we have our own family and we are required to make arrangement for food, clothes, house and other necessaries of life for the members of our family. We have to activate ourselves to earn something, so that we may be able to meet the expenses. Our activities to generate income are termed as economic activities, which are responsible for the origin and development of Economics as subject. Economics was originally introduced as a science if statecraft. It was concerned with the collection of revenue for the state i.e., government. Advisors to the government were also required to point out the best possible way of spending the revenue.

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INTRO

A social science that studies and influences human behavior

Economics is the study of what constitutes rational human behavior in the endeavor to fulfill needs and wants.

·        Adam Smith (1723 - 1790)

–       Author of the famous book "An Inquiry into the Nature and Causes of the Wealth of Nations"

·        Scarcity

–       Scarcity refers to our limited resources and our unlimited wants and needs.

–       For an individual, resources include time, money and skill.

For a country, limited resources include natural resources, capital, labour force and technology.

·        Needs - Wants.

Human wants are unlimited.

We live in a world of limited resources.

The above leads to scarcity.

People try to balance needs and wants.

•         Micro Economics studies how the individual parts of the economy make decisions to allocate limited resources

•         Microeconomics studies:

–       how individuals use limited resources to meet unlimited needs

–       the consequences of their decisions

–       the behaviour of individual components like industries, firms and households.

–       how individual prices are set

–       what determines the price of land, labour and capital

 inquire into the strengths and weaknesses of the market mechanism.

The Factors of Production

·        Land

·        Labour

·        Capital

·        Entrepreneurship