Basic concept

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Basic concept

  1. 1. BASIC CONCEPTS
  2. 2. Any activity that involves the use of scarce resources to satisfy some human wants is known as economic activity .It can be classified into three types: Consumption activity Production activity Exchange activity
  3. 3. All things that have value and satisfy human wants are called goods. It is classified into following types: Material and Non- material goods Economic and Non-economic goods Consumer goods and Producers goods Intermediate and final goods
  4. 4. Material and Non-material goodMaterial goods- are tangible i.e. they canbe seen touched and transferred from oneplace to another Ex shoes ,table, machinesetcNon –material goods- are intangible i.e.they donot possess any shape ,size Ex.Services of doctors,lawyers, teachers etc
  5. 5. Economic and Non economic goodsEconomic goods- have a price and theirsupply is scarce in relation to its demand .For Ex - land and all material goods andnon- material goodsNon economic goods- are called free goods.They are unlimited in supply and thesegoods do not have a price. For ex.Air,water,sunshine etc
  6. 6. Consumer goods and Producers goodsConsumer goods- directly satisfy the human wants For ex penmilk furniture etc it is subdived intoPerishable consumer goodsDurable consumer goodsProducers goods-are goods which help in the production ofother goods that satisfy the wants of the consumer directly orindirectly such as machines, plants ,raw materials it is againdivided intoPerishable producer goodsDurable producer goods
  7. 7. Intermediate Goods and Final goods Intermediate Goods-Goods sold by one firm to another for further production process i.e to manufacture final goods is known as intermediate goods .for example wheat used by bakery to make cakes Final goods-goods sold not for further production but for personal consumption are called final goods.
  8. 8. Want satisfying power of a commodity is known as utility. Utility is subjective.Types of Utility Form utility Place utility Time utility Service utility Knowledge utility Natural utility
  9. 9.  Wealth-is the aggregation of all economic goods and services. It represents the stock of all economic goods at a given point of time. However it can vary periodically over time Income- is a flow concept and represents addition to wealth over time . It represents the aggregate of the economic goods finally used in the system over a year
  10. 10.  Market is an institution rather than any place or location. It refers to a platform where buyers and sellers come into contact with each other and exchange goods and services amongst each other. It facilitates exchange between buyers and sellers
  11. 11. It is derived from the Latin word aequilibriumwhich means equal balance. In economicsequilibrium implies a position of restcharacterized by absence of change.Scitovskydefines “ A market or an economy or any othergroup of persons and firms is in equilibrium whennone of its member feel impelled to change hisbehavior .”

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