BASIC PROBLEMS OF AN ECONOMY
In his landmark essay on the nature
of economics, Lionel Robbins
defined economics as “the science
which studies human behaviour as a
relationship between ends and
scarce means which have
alternative uses”
Scarce Economic Resources
Alternative uses of land
Alternative uses of labour
HUMAN NEEDS AND WANTS
1. BASIC NEEDS-PRIMARY WANTS
2. SECONDARY NEEDS-SECONDARY
WANTS
THREE MAIN ECONOMICS QUESTIONS
WHAT TO PRODUCE?
WHICH GOODS TO
PRODUCE?
IN WHAT QUANTITIES?
THE ANSWER DEPENDS ON:
(a) Differences in the pattern of human wants:
(b) Differences in resources:
(c) Differences in the quantity of production:
HOW TO PRODUCE?
PROBLEM OF CHOICE OF TECHNIQUES:
FOR WHOM TO PRODUCE?
Capitalist Economy
Socialist Economy
Mixed Economy