Lecture on
BASIC ECONOMIC PROBLEM
by Mr Boolaky Manish
@ All Right Reserved
MANISH BOOLAKY NOTES
What is economics

It is a social science which studies human behavior.

Economics is the study of how people allocate scarce
resources for production, distribution, and consumption,
both individually and collectively.

Two major types of economics are microeconomics,
which focuses on the behavior of individual consumers
and producers, and macroeconomics, which examine
overall economies on a regional, national, or
international scale.
Needs v/s Wants
Needs
Human beings, in order to survive need a lot of things. Some of these
things are very important for our existence. For example, food,
clothing, water, shelter and air. These things can be classified
as Needs.
Needs v/s Wants
Wants
Apart from this there are things which are needed by us but they are
not important for our survival and we can live without them also. For
example, going on an expensive holiday, owning a 57 inches Plasma TV.
These are known as Wants. This list is never ending and is continuously
increasing.Wants are said to be unlimited.
Factors of Production

In economics, factors of production (or productive inputs) are the resources and
services. employed to produce goods
FACTORS OF PRODUCTION
DEFINITION
EXAMPLE
REWARD
Land
It refers to all natural resources involved in the production Sunshine, wind,
of goods and services.
soil,waterfall
,fossil fuel,coal
Rent
Capital
It refers to all man-made material involved in the
production of goods and services
Interest
Enterprise/Entrepreneur
It refers to all person to takes decision of how to
organize resources and bears of the risk.
Raw Materials,
building,
equipment &
machinery
Owner, CEO,
Director,
Manager
Profit
Factors of Production-cont
Labour
It refers to all mental and physical efforts
involved in the production of goods and
services.
Welder,
teacher,
carpenter
Wages
Factors of Production
Capital
It refers to all man-made material involved in the
production of goods and services
Raw Materials,
building,
equipment &
machinery
Interest
Factors of Production
Enterprise/Entrepreneur It refers to all person to takes decision of how to Owner, CEO,
organize resources and bears of the risk.
Director,
Manager
Profit
Basic economic problem
Basic economic problem
It all starts with our resources (Land, Labour ,Capital and Enterprise ) which
are limited in supply, that is scare. On the other hand, our wants are
considered to be unlimited and never ending. Hence there will be not enough
resources to satisfy all our wants. A choice need to be exercised. While
making a choice, the next best alternative that has been forgone is known as
opportunity cost.
For example, if sam has Rs 10, he needs to buy a pen and a ruler each costing
Rs 10. He chooses to buy the pen and thus the ruler becomes his opportunity
cost.
Tuturial 1-30 mins
to send on boolakypolytechnics@gmail.com

Question 1:
Explain the concept of the basic economic problem?
Question 2:
Discuss whether knowledge of opportunity cost is important for
1.Student
2.Government
3:A car producer