ECONOMICS
Summary
What is Economics?
Needs are unlimited but Resources are scarce.
Economics aims at satisfying our unlimited
needs with the Limited available resources in
an optimal way. Economic aims at optimum use
of resources. Economics is the study of human
activities performed in the motive of profit.
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n
d
What is Economic Growth?
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Economic growth is the change- increase or
decrease in the value of goods and services
produced by an economy. A positive change
indicates an increase in output of an economy.
1. There are many definitions, as the subject keeps
on evolving, the definition also keeps on evolving.
2. Adam Smithd
= Father of Economics
3. Economics studies
how an entity allocate
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resources at its disposal
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4. A n e nt it y ca n h
b e i n d i v i d u al, b u s i n e s s,
governments or nationa
s
h
s
t
a
r
a are cheaper
Things which are more useful
s
t
r
a
Micro-econmics
Micro-economy is the study of units or an
individuals. It examines the economic
behaviour of units such as consumers,
business, households. i
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Macroeconomics
s
h
Macroeconomy is the study of aggregates.
a
Macroeconomy studies the economysas a
t
whole and its features like national
r
income, employment, poverty and balancea
of payments and inflation.
Macro studies in general rather than
studying specific
ECONOMICS
in
d
ia
Adam Sm ith in h is Wealth of Natio ns
observed--> Things which have greatest value
in
in exchange has little to no use and things
d have little to no value in exchange has
which
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greatest
use. For example Air which is useful
s
than anything
else is available for free and
h
a has hardly any use is sold dear.
diamond which
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t
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What is Economy?
a
s
h
a
Any region with well defined set of rules
and established institutions to implement
those rules is called Economy.
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t
Factors of Production
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a
Inputs needed for the production of goods and
services.Land, Labour, Capital and Entrepreneur
1. Land = Site of production or natural
resources
2. Labour = Does the work at ground level
3. Capital = For investing in machines,
technology and people
4. Entrepreneur = Takes risk, administers and
regulate all other factors.
What is an Economic Activity?
All activities which create value and
utilise resources are called economic
activities.