economics and management

1. INTRODUCTION TO ECONOMICS,
THEORY OF DEMAND &
SUPPLY

2. Introduction to economics
• The word economics is derived from two
greek words oikos and nemein,
• Oikos means household and nemein means
management so management of household is
known as economics.

3. Meaning of Economics
• However the definitions may be classified into
three categories for simplify and clarity as
under:
1. Wealth oriented definition, by adam smith.
2. Welfare oriented definition, by marshall.
3. Scarcity oriented definition, by robbins.

4. 1) Wealth oriented definition
• Adem smith defined
economics as a science
of welth.
• In his book entitled an
inquiry into the nature
and causes of the
wealth of nations
published in 1776

5. 2) Welfare oriented definition
• According to marshall
economics is a study of
man’s actions in the
ordinary business of
life; it enquires how he
gets his income and
how he used it.

6. 3)Scarcity oriented definition
• In 1932 robbins
definitions as a science
which studies human
behavior as a
relationship between
ends and scarce means
which have alternative
uses.

7. Nature of economics
1. Is economics a science?
2. Is it an art?
3. Is it a positive science or normative science?
4. Is it micro or macro?

8. 1) Economics is a science
• A branch of knowledge become systematic or
scientific when relevant facts are collected,
classified and analyzed and laws are
established to explain the cause effect
relationship between these facts.
• Ex. Law of gravitational force.

9. 2)Economics is an art
• Art is practical application of scientific
theories:-
• According to an italian economist luigi cossa
art dose not explain theorems, it solves
general problems.
• It is not concerned with laws, but only with
rules that simplify practice.
• A science teaches as to know, an art teachers
as to do.

10. 3) Economics is an a positive &
normative science
• According to prof. robins economics is a
positive science which studies things as they
are and explain their causes & effects.
• Ex. Poverty in India is 26% prices are rising
continuously.

11. 4)Economics is micro and macro
• Micro economics is concerned with the
determinations of price of a commodity in the
market under different conditions. How rent,
wages, interest etc.
• Macro economics deals with aggregates rather
then with individual units. it is concerned with
entire economy.

12. Scope of economics
Scope of
economics
Consumption
Distribution
Production Exchange
Public finance

13. 1)Consumption
• Consumption refers to the use of wealth for
the satisfaction of wants and desires for
material and non utility of an article and not
the article itself.
• The study of consumption includes
characteristics and classification of human
wants, law of Equi-marginal utility, law of
demand consumers surplus and soon.

14. 2) Production
• The study of production of wealth man of
course, cannot produce or create matter any
more than he can destroy it production,
therefore, means creation and addition of
utilities, under production the main factors of
productions, the laws of return, forms of
industrial organization.

15. 3)exchange
• Under the modern complex economics
organization it is not possible for an individual
to satisfy all his wants by his own efforts.
• Each individuals is ordinarily dependent on
others for the satisfactions of his wants.

16. 4)Distribution
• The apportionment of the wealth produced
amongst the different factors of productions
that have contributed in its production is
known as distribution. Here, the share of the
various factors of production in the from or
rent, wages, interest and profit accruing
respectively to land; labor capital and
enterprise will be taken into account.

17. 5) Public finance
• The state today bears the responsibility not
for the enface of the country against external
aggression and the maintenance of law and
order at home, but also undertakes various
plans for economic and social development.
For this, if requires increasing revenue.
• Public finance otherwise known as the
economics of govt. studies how the govt.
Obtains its revenue and how it spends it.

18. Microeconomics &macroeconomics
• Microeconomics
– The term micro economics has been derived from
the Greek term micro which means small.
– Micro economics analyses the output and price of
individual goods and services.
– In micro economics various components of
economy will be separately studied.

19. Microeconomics &macroeconomics
• Macroeconomics
– The term macro is derived from Greek term
means large.
– Micro economics looks at the total national
output of all goods and service added together, or
the total national income earn by everyone in the
economy.
– In study the economic system as a whole such as,
aggregate consumption, aggregate savings,
aggregate investment, aggregate output etc.