The document provides an overview of concepts in economics from an Indian textbook. It covers: - The origin of economics as a social science and definitions from thinkers like Paul Samuelson and Kautilya. - The main branches of economics including microeconomics, which studies individual components, and macroeconomics, which looks at aggregates. - Key concepts in microeconomics such as wants, goods, utility and wealth. And concepts in macroeconomics including national income, savings, and economic growth versus development. - Differences between economic growth, defined as a rise in national income, and development which also considers social progress. In 3 sentences it summarizes the main topics around definitions and branches of

1. Commerce Class 11 HSC Board
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2. Subject : Economics
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3. 3

4. CHAPTER - 1 : BASIC CONCEPTS
IN ECONOMICS
1.Origin of economics,
2.Meaning of economics,
3.Definitions of economics,
4.Branches of economics,
5.Differences of growth and
development.
6.Question /answers.
4

5. 1.Origin of
economics,
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6. Science
Social science
Economics
E.g.: Psychology
‘mental’,
Sociology
‘social’...
Natural
science
E.g.:
Mathematics,
Physics,
Chemistry...
6

7. Natural
science
laws are
universally
acceptable
validity can
be tested
exact
sciences
empirical
e.g.
Mathematics,
Physics,
Chemistry.
7

8. Social
Scienc
e
laws are
not
universal
only
statements
of general
human
tendencies
abstract or
behavioura
l science
Non
empirical
e.g.
Psychology
‘mental’
aspect
Sociology
‘social’
aspect
8

9. Econ
omics
origin term
'Economics'
lies in the
Greek word,
'Oikonomia'
means
management
of the
household
Economics is
a social
science.
9

10. Science
Social science
• laws are not universal
• only statements of general human tendencies
• abstract or behavioural science Non empirical
• E.g.: Psychology ‘mental’, Sociology ‘social’...
Economics
• Economics is a social science.
• origin term 'Economics' lies in the Greek word,
'Oikonomia
• means management of the household
Natural science
• laws are universally acceptable
• validity can be tested
• exact sciences empirical
• E.g.: Mathematics, Physics, Chemistry...
Revision
10

11. 2.Meaning of
economics,
11

12. Economic
Means
Paul
Samuelson
says
Economics is referred to
as 'Queen of
Social Sciences'
Economics
deals with the
economic aspect of
human
behaviour
how human beings
satisfy unlimited wants
with limited means.
Kautilya's Views
on Economics :
Arthashastra implies the
science of acquiring and
managing wealth.
12

13. Kautilya's Views
on Economics
Arthashastra implies
the science of
acquiring and
managing wealth
Arthashastra is a
treatise on Political
Economy in its
broadest sense.
Artha means 'Wealth'
and Shastra means
'Science'.
13

14. Key-points based on
Kautilya's views
Crucial role of the state or
government
Focus on creation of wealth
as the means to ensure
welfare of the state.
Need for efficient
administrative machinery
for good governance.
Compilation of political
ideas into Arthashastra.
14

15. Paul Anthony Samuelson (May 15, 1915
– December 13, 2009) was an
American economist. The first
American to win the Nobel Memorial
Prize in Economic Sciences, the Swedish
Royal Academies stated,
Economic historian Randall
E. Parker has called him the "Father
of Modern Economics", and The
New York Times considered him to
be the "foremost academic economist
of the 20th century".
when awarding the prize in 1970, that he "has done more than any other
contemporary economist to raise the level of scientific analysis in economic
theory".
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16. Kautilya or Vishnugupta or
Chanakya.
16

17. Revision
Meaning of Economics
Paul Samuelson
*Economics is referred to as 'Queen of Social
Sciences'
*economic aspect of human behaviour
*how human beings satisfy unlimited wants with
limited means.
Kautilya's Views on Economics
*Artha means 'Wealth' and Shastra means 'Science'.
*Arthashastra implies the science of acquiring and
managing wealth.
*Arthashastra is a treatise on Political Economy in its
broadest sense.
Key-points based on Kautilya's views
*Crucial role of the state or government.
*Focus on creation of wealth as the means to ensure welfare
of the state.
*Need for efficient administrative machinery for good
governance.
*Compilation of political ideas into Arthashastra. 17

18. 3. Definitions of
economics
18

19. * Adam Smith
"Father of
Economics",
* wealth-oriented
definition of
Economics.
* 1776 piece of work,
"An Inquiry into the
Nature and Causes of
Wealth of Nations".
*Adam Smith defines
Economics “a
science of wealth".
* Prof. Alfred Marshall Neo-
classical economist
* welfare-oriented definition of
Economics,
*1890 Published book "Principles
of Economics"
* Alfred Marshall defines ;
"Economics is a study of mankind
in the ordinary business of life. It
examines that part of individual and
social action, which is closely
connected with the attainment and
use of material requisites of well-
being".
* Lionel Robbins gave
the most popular
definition of economics
*scarcity-oriented
definition of Economics
*1932 Published book ,
"An Essay on the Nature
and Significance of
Economic Science“
* Lionel Robbins
defines: "Economics is a
science which studies
human behaviour as a
relationship between
ends and scarce means
which have alternative
uses".
Definition of Economics 19

20. 1) Laissez faire i.e.
non-intervention of
the
government.
2) Capital and wealth
accumulation
3) Nature's law in
economic affairs.
4) Division of labour
as an aspect of
growth
theory.
1) Study of an
ordinary man.
2) Economics is a
behavioural
science.
3) Study of material
welfare.
4) Economics is not
simply a study of
wealth.
1) Wants (ends)
are unlimited.
2) Means are
comparatively
limited.
3) Wants are
gradable on the
basis of priority.
4) Means have
alternative uses.
Key-points of definition 20

21. Definition of economics
Alfred Marshall defines ;
• welfare-oriented definition of Economics,
• Economics is “a study of mankind in the ordinary
business of life. It examines that part of individual
and social action, which is closely connected with
the attainment and use of material requisites of
well-being".
Lionel Robbins defines:
• scarcity-oriented definition of Economics
• "Economics is a science which studies human
behaviour as a relationship between ends and
scarce means which have alternative uses".
Adam Smith defines Economics
• wealth-oriented definition of Economics.
• Economic is “a science of wealth".
Revision
21

22. 4. Branches of
economics,
22

23. In 1933
• Sir Ragnar
Frisch
coined
the terms
• Micro
Economics
• Macro
Economics
derived
from the
Greek
words
• 'Mikros'
• 'Makros'
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24. Micro
Economics
Micro means small.
Micro Economics deals
with the behaviour of the
individual variables such
as a household, worker,
firm, industry etc.
Macro-Economics
Macro means large or
aggregate or total.
Macro-Economics is therefore the
study of aggregates covering the
entire economy such as total
employment, national income,
national output, total investment,
total savings, total consumption,
aggregate supply, aggregate
demand, general price level etc.
Meaning of Micro and macro
economics
24

25. Micro Economics
"Micro Economics is the
study of particular firms,
particular households,
individual prices, wages,
incomes, individual
industries, particular
commodities".
Macro-Economics
"Macro Economics deals not
with individual quantities as
such, but with the aggregates
of these quantities, not with
the individual incomes but
with the national income, not
with individual prices but with
the general price level, not
with individual output but with
the national output".
Kenneth Boulding's
Definitions
25

26. Micro
Economics
Want
Goods and Services
Utility
Value
Wealth
Personal Income
Personal Disposable
Income (PDI)
Economic activity
Macro-
Economics
National Income
Saving
Investment
Trade Cycles
Economic Growth
Economic
Development
Basic
Concepts
26

27. Want can be referred to as a need. In economics, want denotes a
feeling of 'lack of satisfaction‘.
• Desire for better living due to inventions and innovations.
• Rise in population.
Characteristics of wants
• Wants are unlimited
• Wants are recurring in nature
• Wants differ with age
• Wants differ with gender
• Wants differ due to preferences
• Wants differ with seasons
• Wants differ due to culture
Classification of Wants
• Economic e.g. food, medicines etc. and Non-economic wants e.g.
air, sun shine etc.
• Individual Wants e.g. a doctor using a stethoscope, a judge
wearing his coat. and Collective wants e.g. travelling by train.
• Necessities, e.g. food, clothing, shelter, health and education.
Comforts e.g. washing machine, mixer, pressure cooker etc and
Luxuries e.g. AC-car, well-furnished house etc. 27

28. Goods and
Services
• Anything that satisfies human wants is termed as a 'good'. e.g. chalk
used by a teacher.
• Services also satisfy human wants but do not have any material
existence, e.g. 'Teaching‘ offered by the teacher.
Utility
• Capacity of a commodity to satisfy human wants or
• want satisfying power of a commodity is called utility.
Value
• Value has two approaches in economics, i.e. 'value-in-use' and 'value
in exchange'.
• Paradox of values : Some commodities have a high value-in-use but
low exchange value, e.g. water whereas some commodities have low
value-in-use but high exchange value due to its scarcity, e.g. diamond
28

29. Wealth
• Wealth refers to “anything which has market value and can
be exchanged for money.” To be regarded as 'wealth', a
commodity must possess the following characteristics :
• i) Utility :A commodity must have the capacity to satisfy
human wants, e.g. furniture, refrigerator etc
• ii) Scarcity :A commodity must be scarce in supply in
relation to its demand if it is to be included in the term
‘Wealth’, e.g. All economic goods for which price is paid.
• iii) Transferability : A commodity should be transferable
from person to person as well as place to place. If the good
is material or tangible then only it is possible to transfer it
from place to place, e.g. vehicle, jewellery etc.
• iv) Externality: A good can be transferred only if it is
external to human body, e.g. bag, chair etc. +96
Personal
Income
• Earnings received by a person from all sources is
called his personal income.
29

30. Personal
Disposable
Income (PDI)
• It is that part of personal income which is left over after
payment of direct taxes such as income tax, wealth tax etc.
• Following are the various types of income.
• A) Fixed income; B) Fluctuating income ; C) Money income ;
D) Real income; E) Contractual income; F) Residual income;
G) Earned income; H) Unearned income
Economic
activity
• Production :
i) Land : ‘Land’ in Economics is a wide term.
ii) Labour : Labour is a human factor of production.
iii) Capital : Capital is a produced means for further
production. iv)
Entrepreneur : Entrepreneur is the organizer who is a real
captain of the industry.
• b) Distribution : It is division of factor rewards among different
segments of the society.
• c) Exchange : It is give and take between various units in the
economy.
• d) Consumption : It is making use of goods and services to
satisfy human wants. 30

31. 31
• Definition by National Income Committee : “A national estimate
measures the volume of commodities and services turned out
during a given period counted without duplication”.
National
Income
• It is that part of the income which is set aside to satisfy the future
needs by foregoing current consumption.
• In other words, saving is that part of income which is not spent
currently on consumption.
Saving
• It refers to creation of capital assets through mobilisation of
savings, e.g.
• machinery, equipment etc.
Investment
• They are ups and downs in the overall economic activities.
Ups and downs means fluctuations caused by inflation and
depression respectively.
Trade Cycles
• The term economic growth has a 'quantitative' dimension. In
simple words, economic growth means an increase in the real
national income of the country, over a long period of time.
Economic
Growth
• This is a wider concept which has a 'qualitative' dimension.
Economic development implies economic growth plus
progressive changes in certain important variables which
determine well-being of the people, e.g. education, health etc.
Economic
Development

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5. Differences of
growth and developmen

33. 33
Economic Growth
1) Economic growth means an
increase in the real national
income of the country.
2) This concept is narrow and
quantitative.
3) Economic growth is possible
without economic development.
4) Economic growth is a
unidimensional concept.
5) Economic growth is
spontaneous and reversible.
6) Economic growth is measured
in terms of national income and
per capita income.
Economic
Development
1) Economic development indicates economic
growth plus progressive changes in certain
important variables which determine well-being
of the people.
2) This concept is broader and
qualitative.
3) Economic development is not
possible without economic
growth.
4) Economic development is a
multi- dimensional concept.
5) Economic development is
deliberate and irreversible.
6) Economic development is measured in terms
of agricultural productivity, industrial
productivity quality of human life etc.

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6. Question /answers.

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