Basic Concept of Economics, An introductory class to make students understand the Concept of Economics and Problem of choice.

1. Concept of Economics and
Demand
By
Dr. Raksha Singh
Professor
Department of Economics
Central University
IGNTU,raksha.singh@igntu.ac.in

2. ECONOMICS IS EVERYWHERE
 Economics- Managing household affairs
 You invest goods or resources- in expectation of a return
that is greater than your initial investment
WE ALL ARE PRACTISING ECONOMICS-Everywhere
 Small kids - crying
 Temple care taker
Prof Raksha Singh

3. ECONOMICS (vFkZ'kkL=)
 Economics is based on human behaviour
 Economics is a subject matter that deals
with economic problems related to human
life.
 The economist’s lab is the real world. They
don’t conduct controlled lab experiment .
 Economics is concerned with selection of
resources under conditions of scarcity
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Prof Raksha Singh

4. Economic Problem
 It is a problem of choice. It arises because of two reasons
1.Our Means (resources) are scarce (limited) in relation to
our wants
Even the richest person on the earth would never buy
all the things at a point of time which he wishes to buy
2.Resources have alternative uses.
With a two hundred fifty Rupee note one can buy many
things E.g. movie ticket, popcorn…
So there is a problem of choice
Prof Raksha Singh

5. Economic Problems….
 As a Consumer or Producer or Rich or poor, All face economic
Problems
 As a Consumer
 Every household faces: What to buy and what not to buy
 Economics teaches the households to use the limited
resources in a manner such that their satisfaction (
welfare) increases or maximised
 As a Producer
 Entrepreneur faces ‘ What to produce and What not to
produce., with a given resources
 Economics teaches producer to use their resources in a
manner such that profits are maximised.
Prof Raksha Singh

6. Economic Problems….
 Government :
 They also faces the problem of choice
 1. How to use public revenue ( money collected through
taxation).
 2. Should money be spent for the construction of national
highways, flyovers and dams or for funding mid-day
meals ….. So that social welfare is maximised.
Prof Raksha Singh

7. Problem of Choice
 When the Problem of choice ( Economic
problems) are studied and addressed at the
level of Individuals, it is called
MICROECONOMICS
 When these are studied or addressed at
country as a whole( or at the level of different
regions in the country), it is called
MACROECONOMICS
Prof Raksha Singh

8. DEMAND
 As per Alfred Marshall “the amount demanded
increases with a fall in price, and diminishes with
a rise in price”
 When price of a commodity is lower, consumers
will buy more of it
 When price of a commodity is higher, consumers
will buy less of it
 Mr A generally purchase 4 kg of potato weekly at Rs 25/
per kg, but in market seller offered Rs 5 per kg ,so Mr A
purchased 25kg of potato.
Prof Raksha Singh

9. DEMAND …
 Demand for a commodity by a household is a
quantity of a product which he /she would buy
per unit of time at a given price.
 Demand is an effective desire.
 E.g Mrs A went to a market to purchase designer
suit and jewellery ,but she end up purchasing a suit.
 Mrs A Desire = Designer Suit and Jewellery
Mrs A Demand= Designer Suit
 Person desires so many things but what finally he/she
purchases constitute Effective desire or demand
Prof Raksha Singh

10. DEMAND FUNCTION
 Determinants of demand conveniently represented
through Demand Function.
Qx = f ( Px,P0,Y,T,S,D,W,O..)
Qx is the quantity demanded of ‘x’ commodity,
Px =Price of commodity ‘x’ ,P0 = Price of other commodities, Y= Income of the
consumers, T =Tastes and Preferences, S= Size and composition of Population, D=
Distribution of income, W= Weather conditions, O- Other factors
 Ceteris paribus = Other things being equal .To study the effect of
demand of a commodity only its price will be considered ,other
factors will be treated as constant.
Qx = f ( Px,P0,Y,T,S,D,W,O..)
Prof Raksha Singh

11. QUESTION
 Why is milk sold in rectangular
containers, while soft drinks are
sold in round ones?
Prof Raksha Singh

12. COST EFFECTIVE
Prof Raksha Singh

13. ANSWER
 Rectangular containers use shelf space
more economically.
 Soft drinks are consumed directly by the
container, the extra cost is justified
because it is easier to hold.
Prof Raksha Singh

14. Question (on line class)
 What are the main underlying determinants of demand for
the following? ( as a student, explain with example)
 Newspaper
 Pizza
 Fruits
 Define Economic Problems with example?
Prof Raksha Singh

15. WORDS IN HINDI
 Determinants of Demand - मधांग क
े निर्धारक तत्व
 Effective Desire - प्रभधवी इच्छध
 Law of Demand- मधांग कध नियम
 Inverse Relationship- प्रनतगधमी सांबांर्
 Substitution Effect- प्रनतस्थधपि प्रभधव
 Income Effect आय प्रभधव
 Demand Schedule- मधांग सूची
 Extension of Demand मधांग कध ववस्तधर
 Contraction of Demand मधांग कध सांक
ु चि
Prof Raksha Singh

16. References
 (2020, Jan). Retrieved from
https//www.canstockphoto.com
 https//www.canstockphoto.com. (2019, Dec).
Retrieved from https//www.canstockphoto.com
 https://www.pixabay.com. (2019, Nov). Retrieved
from https://www.pixabay.com
 https://www.shutterstock.com. (2019, March).
Retrieved from https://www.shutterstock.com
 I.C. DIngra, V. (1997). Economics. Sultan Chand&
Sons.
 Kar.lE.case, R. C. (2018). Principles of Economics.
Pearson.
Prof Raksha Singh

17. Prof Raksha Singh
THANK YOU