This document defines basic economic concepts and classifies goods and activities. It discusses that economic activity involves using scarce resources to satisfy wants, and can be consumption, production, or exchange. Goods are classified as material and non-material, economic and non-economic, consumer and producer, intermediate and final. Utility is the want-satisfying power of a commodity. Wealth represents the stock of economic goods, while income is the flow of additions to wealth over time. A market facilitates exchange between buyers and sellers. Equilibrium implies a position of rest without change in a market.

1. BASIC CONCEPTS

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. 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. Material and Non-material good
Material goods- are tangible i.e. they can
be seen touched and transferred from one
place to another Ex shoes ,table, machines
etc
Non –material goods- are intangible i.e.
they donot possess any shape ,size Ex.
Services of doctors,lawyers, teachers etc

5. Economic and Non economic goods
Economic goods- have a price and their
supply is scarce in relation to its demand .
For Ex - land and all material goods and
non- material goods
Non economic goods- are called free goods
.They are unlimited in supply and these
goods do not have a price. For ex.
Air,water,sunshine etc

6. Consumer goods and Producers goods
Consumer goods- directly satisfy the human wants For ex pen
milk furniture etc it is subdived into
Perishable consumer goods
Durable consumer goods
Producers goods-are goods which help in the production of
other goods that satisfy the wants of the consumer directly or
indirectly such as machines, plants ,raw materials it is again
divided into
Perishable producer goods
Durable producer goods

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. 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.  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.  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. It is derived from the Latin word aequilibrium
which means equal balance. In economics
equilibrium implies a position of rest
characterized by absence of change.Scitovsky
defines “ A market or an economy or any other
group of persons and firms is in equilibrium when
none of its member feel impelled to change his
behavior .”