2. Scheme of Presentation
What is Economics?
Definition of Economics
Scarcity Resources and Fundamentals Questions
Scarcity and Choices
Nature and Scope of Economics
3. What is Economics?
Economics is a social Science which studies how individual,
Business organizations, society and nation able to allocate scarce
resources/ limited resources to fulfill humans unlimited wants and
achieve objectives/ goals of organization.
Mainly individual and Business organization have Limited resources
but Wants/desires/ objectives are unlimited
Limited resources/scarcity of resources includes Land,
Labor/Manpower, capital, funds/Money, raw material and
equipments etc
Resources used by organization to produce goods
Similarly, resources like money used by individual to purchase
goods and services to satisfy human wants.
4. Economics tells us how we use limited resources to
fulfill humans unlimited wants
In economics, the term want refers to a wish or
desire to purchase goods and services that give
satisfaction.
Individual use limited resources/ Money to
purchase goods and services to achieve the
maximum satisfaction.
Similarly, Business organization use limited
resources to produce goods and services and
maximize profit from limited resources.
5. What are Individual Wants
Desire to purchase many products/ goods like
Purchasing house
Purchasing car
Purchasing Land
Purchasing MobilePhones, Bike etc
6. What are the organization objectives/Goals
Profit Maximization
Sales Maximization
Revenue Maximization
Growth Maximization
7. How does Engineers close Associate
with Economics?
The most of Engineers are used to work in various
organizations and design projects/ Products.
They need to apply economics concepts like demand,
Supply, different types of costs and Markets, production
analysis and efficient use of scarce resources
Economics assist engineers how to use scarce resources to
achieve objectives of project/ organization.
Economics helps engineers to make better business
decisions
8. How to use Limited Resources Efficiently
Understand requirements resources and
availability resources
Fix timeline of project
Forward Planning resources
Reduce wastage of resources
Assign Resources Based on Specific Goals
Time Track Resources
Alternative use of limited resources
9. Meaning and Definition of Economics
The term of Economics is taken from Greek word oikos and
nomos. Oikos means households and Nomoes means
Management.
Economics means managing households by using limited
resources.
Economics defined as social science which studies how
people/households take decision to allocate scarce
resources to fulfill unlimited wants and also describe,
production, distribution(sale of goods) and consumption of
goods(use of goods) in an economy.
10. Scarcity and Fundamentals Questions.
Scarcity means limited resources
scarcity is the idea that resources (such as time,
money, land, labor, capital, entrepreneurship, and
natural resources) are only available in limited
quantity.
concept of scarcity conveys the opportunity cost of
allocating limited resources.
Example limited cultivation land is available to grow
foodgrains to meet higher population
Limited Water
Limited manpower
11. Fundamentals Questions due to scarcity
of Resources
What product need to design/ What to produce
How to design product/how to produce goods
For Whom to Produce
At What quantity need to be produce
What is price of product
What is cost Project
How much funds allocated to fixed assets and current
assets
12. Scarcity, Choices and Opportunity Cost
Concept of scarcity conveys the opportunity cost of allocating
limited resources.
Choices mean that one alternative is selected/decided over
another
For Example a company can produce three goods A, B and C.
If company to decide/choose/select to produce product B due
to limited resources. Company/producer need to decide which
good want to produce from range of possible options.
Similarly, consumer decide which good, service or resource to
purchase or provide from a range of possible options.
13. What is an Opportunity Cost?
The opportunity cost is the value the company
forgoes when choosing one option over another,
whether the loss is monetary or others .
Example a company produce two goods A and B.
For producing Product A the company receive
total income 15 lakhs and producing Product B the
company receive total income 7 lakhs per month.
14. Nature and Scope of Economics
Nature of Economics
The nature of economics deals with the question that whether
economics falls into the category of science or arts. Various
economists have given their arguments in favour of science while
others have their reservations for arts.
Economics as a Science
To consider anything as a science, first, we should know what
science is all about? Science deals with systematic studies that
signify the cause and effect relationship two variables. Science
has certain features 1. facts and information are collected and
are analyzed systematically to arrive at any certain conclusion. 2.
Science is a systematized body of knowledge 3. Experiment and
observation 4. variables Predicated. 5 it has own theories and
and principles
15. • Positive Science : It is based on cause and effect relationship
between variables and lays down the facts. It also measures and
analysis relationship between variables.
• Example An increase in the minimum wage increases
unemployment among teenagers.
• Normative Scicence : It is based on value judgements and is to do
with ‘how’ things should be.
• Example: At present, unemployment is a more serious problem
than inflation.
Economics as an Art
It is said that “knowledge is science, action is art.” Economic
theories are used to solve various economic problems in society.
Thus, it can be inferred that besides being a science, economics
is also an art.
16. Scope of Economics
How to Explain the Scope of Economics?
The word scope can be understood as ‘the extent of the
area that something deals with’. Major things come under
the preview of Economics are considered as its nature
and scope.
Micro Economics
Macro Economics
Environmental Economics
International Economics
Public finance
Financial Economics
17. Micro Economics
Microeconomics
Microeconomics is concerned with studying the micro elements of the
economy of a nation. It deals with the individual units of an economy.
Microeconomics studies the concept of product pricing along with
the pricing of production factors, and the behavior of households,
individuals, and firms. It enables us to analyze how these units
allocate their scarce resources, their distribution, and utilization.
The scope of microeconomics includes:
• Individual firm Demand & Supply and individual firms decision
• Individual firm Production
• Individual Consumer
• Individual Market
• Individual firm product price
• Example : Maruti suzuki automobile company hiked price their all
brand cars duo to increase in oil Price
18. Macroeconomics
Macroeconomics is another major division of Economics. It solely
focuses on overall production/over all economy. It enables a student
to study the entire economic activities rather than individual units.
It study about economy as whole or Economy aggregates
Here you can study the level of output, total saving, overall
consumptions, total investments etc. Growth, business cycle,
unemployment, inflation and deflation are the main characteristics
of macroeconomics. It study about
Total output
Total Saving
Total Investment
GDP, inflation , National Income
Example: study about increase in total national output and its impact on
total supply and demand in entire economy.
It study about increase in inflation and it impact on total unemployment in
entire economy
19. Difference between Micro and Macro
Economics
Microeconomics Macroeconomics
Meaning
Microeconomics is the branch
of Economics that is related to
the study of individual,
household and firm’s
behaviour in decision making
and allocation of the
resources. Other words, it
study about small units/
individual units
Macroeconomics is the branch
of Economics that deals with
the study of the behaviour and
performance of the economy
in total/ Economy as whole.
The most important factors
studied in macroeconomics
involve gross domestic product
(GDP), unemployment,
inflation and growth rate etc
20. Area of study
Microeconomics studies the
particular market/ small
segment of the economy
Macroeconomics studies the
whole economy, that covers
several market segments
21. Deals with
Microeconomics deals with various issues like demand,
supply, factor pricing, product pricing, economic welfare,
production, consumption, and more.
Macroeconomics deals with various issues like national
income,GDP Total saving and investment, distribution,
employment, general price level, money, and more.
Business Application
Micro Economics is applied to internal issues.
Macro Economics applied to environmental and external
issues.
22. Scope
Micro economics covers several issues like individual consumer demand,
Individual firm supply, factor pricing, product pricing, economic welfare,
individual firm production, individual consumption, and more.
Macro Economics covers several issues like total demand, Total supply
distribution, national income, GDP, Total employment, money, general price
level, and more
23. Environmental Economics
Environmental economics is a sub-field
of economics concerned with environmental issues.
Particular issues include the costs and benefits of
alternative environmental policies to deal with air
pollution, water quality, toxic substances, solid waste,
and global warming."
24. International Economics
It study of economic relations between countries. It delas with
economic activates and trade among various countries and their
consequence.
Mainly it focus on production, export and import of goods and services
25. Public Finance
Public finance is the management of a country’s
revenue, expenditures, and debt load through
various governments
26. Models and Assumptions in Economics
Model A formal statement of a theory, usually a mathematical statement of a
presumed relationship between two or more variables.
An economic model is a theoretical construct representing
economic processes by a set of variables and a set of logical and/or quantitative
relationships between them. The economic model is a simplified,
often mathematical, framework designed to illustrate complex processes
A model may have various exogenous variables, and those variables may change
to create various responses by economic variables.
Economic models are simplified versions of reality used to analyze real-world
economic situations.
Models are useful precisely because they are simplified representations of
systems.
Example of economic Models
Demand Theory / Model
Supply Theory/ Model
Cobb–Douglas model of production.
production possibility frontier/Model
Circular flow of Income model
27. For instance when economists use to develop model like demand
theory/model and they simplify model by including less variables /factors
and make assumptions one or Two variable represent entire model.
In case of Demand, there are many factors/variables which affecting it
namely Price of product, Consumer income, price of related goods,
Population, Tests and preference.
In demand model economists assume price of product one of important that
determines demand but other factors/ variable remain unchanged/ not not
included other variables/factors
Economists are certainly not alone in relying on models: an engineer may use
a computer model of a bridge to help test whether it will withstand high
winds, or a biologist may make a physical model of a nucleic acid in order to
understand its properties better.
One purpose of economic models is to make economic ideas sufficiently
explicit and concrete to be used for decision making by individuals, firms
or the government.
For example, the model of demand and supply Opens in new window is a
simplified version of how the prices of products are determined by the
interactions between buyers/demand and sellers/supply in markets.
28. The Role of Assumptions in
Economic Models
Economists make assumptions for the same reason: Assumptions
can simplify the complex world and make it easier to understand
Any model is based on making assumptions because models have to
be simplified to be useful. We cannot analyze an economic issue
unless we reduce its complexity.
For example, economic models make behavioral
assumptions about the motives of consumers and firms.
Economists assume that consumers will buy those goods and
services that will maximize their wellbeing or their satisfaction.
Similarly, economists assume that firms act to maximize their
profits.
29. To develop a model, economists generally follow these steps:
1.Decide on the assumptions to be used in developing the model.
2.Formulate a testable hypothesis.
3.Use economic data to test the hypothesis.
4.Revise the model if it fails to explain well the economic data.
5.Retain the revised model to help answer similar economic questions in the future.
30. What is an assumption?
Something that is believed to be true or probably true but that is not known
to be true something that is assumed; ...
The economists and scientists have to decide on the assumptions to be used
while developing model, for instance, there are many factors/variables which
affecting demand namely Price of product, Consumer income, price of related
goods, Population, Tests and preference.
In demand model economists assume price of product one of important factor
that determines demand but other factors/ variable remain unchanged/ not
included other variables/factors
31. Production Possibilities Curve- Economic Model
Production possibilities curve in economics measures the maximum
output of two goods produced using a given amount of inputs/ limited
resource. In other words
The production possibility frontier (PPF) is a visual representation used
to illustrate the maximum possible output combinations of two separate
products that can be produced using the same amount of limited
resources.
The input is any combination of the four factors of production and other
natural resources (including land), labor, capital goods, and
entrepreneurship.
32. Assumptions of Production possibilities
curve/Model
• A company/economy wants to produce only two goods
such a consumer goods and capital goods
• There are limited resources
• Technology and techniques remain constant
• All resources are fully and efficiently used
33. Key Points
• The production possibility frontier is a visual representation
showing when company/ economy producing two goods
using the same amount of limited resources.
• With resources being limited, the illustration will show the
trade-off that must occur to produce more of one product
over the other.
• The production possibility frontier graph is often referred
to as the production possibilities curve.
• Businesses and economies will utilize the production
possibility curve to improve efficient use of resources.
34. Illustration
A company/ manufacture/business organization can
produce two goods namely Robots and Corn with given
100 units labors and 50 crore of Capital.
37. All resources were devoted to the production of
robots, the economy would produce 100 robots,
but zero tons of corn. On the other end of the
chart, we see the other extreme where all resources
were devoted to the production of corn. 50 tons of
corn could be produced, but then zero robots
would be produced. Intermediate combinations of
corn and robots are also shown.
38. Producing goods inside the PPC shows that the economy or company
is not fully utilizing resources. Producing goods outside the PPC
impossible since there are no additional resources available
Points that lie on PPC which considers most efficient use of resources
Reducing the amount of corn that is produced and increasing the
amount of robots produced, the more resources need to allocate
production of Robots and less resources allocated to production of
corn.
Points A, B and C represent the most efficient use of resources to
generate the best sugar and coffee production combinations.
39. Basic Assumptions of Economics
1. Economic Rationality
Every decision maker in an economic system behaves in a rational
manner and attempts to maximize his gain/welfare/ satisfaction
Economic rationality presupposes that every person knows his
interest and selects that course of action which gives him greatest
amount of satisfaction.
The assumption of economic rationality does not carry any moral or
ethical implications.
Rationality, for economists, simply means that when you make a
choice/decide, you will choose the thing you like best
An example of a rational consumer would be a person choosing
between two cars. Car B is cheaper than Car A, so the consumer
purchases Car B.
40. Ceteris Paribus
2. Ceteris paribus i.e. “Other things being equal”/
other factors are held constant.it helps isolate
the effect of one variable on another.
This is the most widely used assumption of
economics.
This assumption shows the limitations in the
way of any economic generalization.
The law of demand, for example, states that
a large quantity of commodity or service will
be demanded at a lower price, other things
remain the same
41. Concept of Equilibrium
3. Concept of equilibrium
equilibrium denotes the state of rest.
it shows a position of no change or position of maximum gain.
The economists assumes that economy has a natural tendency to
reach equilibrium.
For example, imagine that sellers/ producer is willing to sell/supply 5000 units of
barrel crude oil at a price of $ 90 per barrel . If buyers are willing to buy/demand
5000 units of barrel at that price, this market would be in equilibrium at the price
of $90 and at the quantity of 5000 Units
Demand= supply
42. Static Economy
4. Static economy
Economics studies the problem of allocation of
resources between goods and services on the
assumption that technology and resources are given in
an economy.
It implies that economy is producing maximum amount
of national income with the given technology and
resources
43. Circular Flow of Income- Economic Model
The circular flow of income is an economic model that
reflects how money or income flows through the different
sectors of the economy namely households and business
firms.
A circular flow of income is an economic model that
describes how the money exchanged in the production
and consumption of goods and services flows in a circular
manner from producers to consumers and back to the
producers
44. Assumptions of this Model
This model assumed there are only two sectors, firms,
and households.
1. There are no savings by the households. Whatever they
earn, they spend in the form of consumer expenditure.
2. Firms retain no profit, and whatever they earn from
selling goods and services is given back to households in
wages, rent, etc.
3. There is no government interference in the money flow.
45. The basic model of the circular flow of income considers only two
sectors – the firms and the households – which is why it is called a two-
sector economy model.
Let’s understand the meaning of these terms and the whole concept in
simple steps.
Business Firms Sector
• Firms are the producers of goods and services, and therefore, they
require various production resources/ inputs/ factor of production to
produce goods and services.
• The factors of production are land, labor, building, stock, stationery,
etc.
• Households provide the resources or factors of production. For
example, a household provides land and labor to carry out business
operations in exchange for the money paid in rent, wages, etc.
• So, the money flows from the firms to the household in from rent,
46. • Household Sector
• Household consists of all individual in home and supply
factor of production such land and labour to business firms
and household receive income in from of wages and rent.
• The households utilize wages and rent to purchase certain
goods and services to fulfill their needs and wants.
• When the households pay for these goods and services, the
money flows back to the firms, completing the circular
movement of money.
48. Example
OnePlus Technology is chinse based mobile company produce smart
mobile phones
We can take the example of a oneplus factory to explain the circular
flow of income macroeconomics.
• Here, the one plus factory is the firm that is the producer of smart
mobile phone. Some of the factors of production include semiconductor,
land for housing the factory, the building, and laborers for carrying out
the production process.
• The household that has rented out its land to establish the factory will
enjoy monetary compensation or rent in exchange. Simultaneously, the
labor will be compensated with wages in exchange for their hard work
to produce ONE PLUS Mobile phones.
• The household will purchase this mobile phones utilizing the money it
earned as wages or rent.
• When households pay for the this mobile phones, the money will reach
the factory owners/ business firms, completing the money’s circular
flow.
49. Central Economic
Problems ntraProblems of an
Economyems of an Economy
List of Economic Problems:
(A) What to produce?
• A country cannot produce all goods because it has limited resources.
• It has to make a choice between different goods and services.
• Every economy/ company has to decide what goods and services should be produced.
• Example: If a farmer has a single piece of agricultural land, then he has to make a choice
between two goods, i.e., whether to grow rice or wheat.
• Similarly, our government has to decide where to allocate funds, for the production of
defence goods or consumer goods, and if both, then in what proportion.
(B) How to produce?
• This problem refers to the choice of technique of production. It arises when there is an
availability of more than one way to produce goods and services.
• There are mainly two techniques of production. These are:
• Labour intensive technique(greater use of labour)
• Capital intensive technique(greater use of machines)
• Labour intensive technique promotes employment whereas capital intensive technique
promotes efficiency and growth.
50. (C) For whom to produce?
• The society cannot satisfy all the wants of all the
people. Therefore, it has to decide who should get how
much of the total output of goods and services.
• Society has to make choice of whether luxury goods or
normal goods have to be produced. This distribution or
proportion directly relates to the purchasing power of
the economy
51. Causes of Economic Problems
Causes of Economic Problem
• Scarcity of resources: Resources like labour, land, and capital
are insufficient as compared to the demand. Therefore, the
economy cannot provide everything that people want.
• Unlimited Human Wants and choices : Human beings’
demands and wants are unlimited which means they will never
be satisfied. If a person’s one want is satisfied, they will start
having new desires. People’s wants are unlimited and keep
multiplying, therefore, cannot be satisfied because of limited
resources.
• Alternative Uses: Resources being scarce, the same resources
are used for different purposes. and it is therefore essential to
make a choice among resources. For instance, petrol is used in
vehicles and is also used for generators, running machines,
etc. Therefore, the economy should now make a choice within
the alternative uses.
53. Unit: 2
What is Demand?
In economics, ‘demand’ stands for a consumer’s ability and
willingness to purchase a good or service at given price.
Demand is the quantity of a commodity that a consumer is
willing and able to buy, at each possible price during a given
period of time.
Both Willingness and ability to purchase a commodity
For Example Rich person has ability and will willingness to
purchase a Car it called as Demand. Poor Person desire to buy
a car but does not have ability to purchase a car it does not
mean that demand
54. Importance of Law of Demand/ Demand
Analysis
Importance of Law of Demand/ Demand Analysis as follows
To decide number of units goods to be produced by
organization based on demand
To fix price of product based on demand
To understand consumer behaviour
To conduct market analysis
55. Factors Influencing Demand
• Price of the Product. ...
• The Consumer's Income. ...
• The Price of Related Goods. ...
• The Tastes and Preferences of Consumers. ...
• The Consumer's Expectations. ...
• The Number of Consumers in the Market.
56. n
Price of Product: Price is the most important determinant of demand.
When the own price of a commodity falls, its demand rises and when its
own price rises, its demand falls.
Thus, we can say that there is an indirect relation between the price of a
commodity and its quantity demanded.
57. Price of Related goods
Related goods are of two types. They are substitute and
complementary.
(i) Substitute goods
Substitute goods are those goods which can be used in place of
one another for satisfaction.
When the prices of the substitute goods rise, the demand for the
given commodity also rises and vice versa.
For example, if the price of Maruti Swift increases, the demand
for i20 will rise.
58.
59. ii)Complementary goods
Complementary goods
Complementary goods are those goods which are used together to satisfy
a particular want, like tea and sugar. An increase in the price of
complementary good leads to a decrease in the demand for given
commodity and vice-versa
(Car and Petrol) When the prices of the complementary goods rise, the
demand for the given commodity falls and vice versa.
For example, if the price of petrol rises, the demand for cars falls
60. Income of the Consumer
Income of the Consumer: Demand for a commodity is also
affected by income of the consumer. However, the effect of
change in income on demand depends on the nature of the
commodity under consideration.
i. If the given commodity is a normal good, then an increase
in income leads to rise in its demand, while a decrease in
income reduces the demand.
II. Inferior goods (Negative relation)
These are the goods whose demand falls with the rise in income
and vice versa. Example: Low quality rice
61. Tastes and Preferences: Tastes and preferences of the consumer
directly influence the demand for a commodity. They include changes
in fashion, customs, habits, etc. If a commodity is in fashion or is
preferred by the consumers, then demand for such a commodity rises.
On the other hand, demand for a commodity falls, if the consumers
have no taste for that commodity.
Expectation of Change in the Price in Future: If the price of a certain
commodity is expected to increase in near future, then people will
buy more of that commodity than what they normally buy. There
exists a direct relationship between expectation of change in the
prices in future and change in demand in the current period. For
example, if the price of petrol is expected to rise in future, its
present demand will increase
62. Types of Demand
Demand can be of the following types:
1. Market demand
2. Individual demand
3. Composite demand
4. Joint demand
5. Direct and derived demand
63. Market demand is the quantity that all the consumers in a
particular market are willing and able to purchase at various price
levels.
For example 1000 consumers in market and add all consumer
demand for product we derive market demand
Individual demand refers to the quantity that a single consumer is
willing and able to purchase at various price levels.
Composite Demand:
When a commodity can be used for more than one purpose, then
such type of demand is known as Composite Demand. For
example, the demand for milk is a composite demand as it can be
used for various purposes like ice gram, butter milk tea, sweets,
etc.
64. Joint Demand:
When demand for two or more goods arises simultaneously for
satisfying a particular want of the consumer, then such type of
demand is known as Joint Demand. For example, the demand for
petrol and car joint demand.
Direct Demand: When the goods and services are demanded by
consumers to satisfy their wants directly, such demand is called
direct demand. demand for books, stationery, clothes, food, etc., is a
direct demand as these goods directly satisfy the wants
Derived Demand
Derived Demand is demand for a good or service that arises as a
result of demand for another related good or service. For Example
the rise in demand for mobile phones and other mobile devices has
led to a strong rise in demand for lithium. Lithium is used in the
batteries.
65. Law of Demand
The law of demand states that there is a inverse relationship
between the price and quantity demanded of a commodity over a
period of time.
Definition: Alfred Marshall state, demanded increases with a fall
in price and diminishes with rise in price’.
According to Ferguson, the law of demand is that the quantity
demanded varies inversely with price.
The Law of Demand states that other things remaining constant,
the quantity demanded of a commodity expands with fall in its
price and contracts with a rise in its price.
So, there is an inverse relationship between price and quantity
demanded of a commodity. This is explained with the help of an
imaginary table and the curve which is based on imaginary data:
66.
67. Assumptions of the Law
1. No change in the consumer's income
2.No change in consumer's tastes and preferences
3. No changes in the prices of other goods
4. No changes in other factors
68. Demand Schedule and Demand
curve
Table is a hypothetical demand schedule of an
individual consumer. It shows a list of prices
and corresponding quantities demanded by an
individual consumer. This is an individual
demand schedule.
69.
70. Movement in Demand Curve
The movement in demand curve occurs due to the
change in the price of the commodity whereas the shift in
demand curve is because of the change in one or more
factors other than the price.
Contraction in demand. An increase in price from $10 to
$12 causes a movement along the demand curve, and
quantity demand falls from 55 to 40. We say this is a
contraction in demand
Expansion in demand. A fall in price from $10 to $ 7 leads
to an expansion (increase) in demand. As price falls, there
is a movement along the demand curve and more is bough
71.
72. Exceptions to the Law of Demand
Giffen Goods
Veblen Goods
The expectation of Price Change
Necessary Goods and Services
Change in Income
73. Giffin’s Paradox/ Giffen Goods
Some modern economists consider Giffin’s Paradox as the only exception to
the law of demand. According to the economist named Giffin, if the price
decreases of some lower quality foods, their demand also decrease instead
of increasing. This is called Giffin’s Paradox.
Giffen goods are inferior goods like low quality rice, maize, potato. Price of
these commodities declines, demand also reduced .
Veblen goods
Veblen goods refer to luxury goods that result in an increase in demand due
to a price rise because these products then become a status symbol.
Example, cars, diamond jewelry,
74. Expectation of Price Change
In addition to Giffen and Veblen goods, another exception to the law
of demand is the expectation of price change. There are times when
the price of a product increases and market conditions are such that
the product may get more expensive. In such cases, consumers may
buy more of these products before the price increases any further.
Consequently, when the price drops or may be expected to drop
further,
For instance, in recent times, the price of onions had increased to
quite an extent. Consumers started buying and storing more onions
fearing further price rise, which resulted in increased demand.
75. Necessary Goods and Services
Another exception to the law of demand is necessary or basic
goods. People will continue to buy necessities such as
medicines or basic staples such as sugar or salt even if the
price increases. The prices of these products do not affect
their associated demand.
Change in Income
Sometimes the demand for a product may change according to
the change in income. If a household’s income increases, they
may purchase more products irrespective of the increase in
their price, thereby increasing the demand for the product
76. Meaning of Supply and Law of Supply
Meaning of Supply
Supply refers to the quantity of a good or service that the
producers/sellers/firms are willing and able to sale to the market at
various prices during a period of time.
Supply is defined as the quantity of goods or services that
suppliers/sellers are willing and able to sale to customers in market.
Demand and Supply are two pillars of economics.
A market is an place where buyers and sellers to exchange goods or
services for money.
Example, a Jawa company is producer of motorbiks is willing and
able to sold 1000 yezdi variant at Rs 2,60,000 per piece with in six
month
77.
78. Factors Influencing Supply
Determinants of Supply
The factors on which the supply of a commodity depends are known
as the determinants of demand. These are:
• Price of the Commodity
• Firm Goals
• Price of Inputs or Factors
• Technology
• Government Policy
• Expectations
• Prices of other Commodities
• Number of Firms
•
79.
80. 1. Price of the Commodity
It is the main and the most important determinant of supply. When the
price of the commodity is high, the producers or suppliers/firms are willing
to sell more commodities.Thus, the supply of the commodity increases.
Similarly, when the price is low the supply of the commodity decreases
owing to the direct relationship between the price of a commodity and its
supply.
2. Firm Goals
The supply of goods also depends on the goals of an organization. An
organization may have various goals such as profit maximization, sales
maximization, employment maximization, etc.
Where the firm’s objective is the maximization of profit, it will sell more
goods when profits are high and less quantity of goods when the profits are
low
81. 3. Price of Inputs or Factors
The price of inputs or the factors of production such as land, labor, capital,
and entrepreneurship also determine the supply of the goods. When the
price of inputs is low the cost of production is also low.
Thus, at this point, the firms tend to supply more goods in the market and
vice-versa.
4.Technology
When a firm uses new technology it saves the inputs and also reduces the
cost of production. Thus, firms produce more and supply more goods.
82. 5. Government Policy
The taxation policies and the subsidies given by the government als
impact the supply of goods.
When the taxes are high the producers are unwilling to produce mor
goods and thus, the supply will decrease.
On the other hand, when the government grants various subsidies an
gives financial aids to the producers, they increase the production o
goods. Thus, the supply also increases.
6.Price Expectations
When the producers or suppliers expect that the price shall increase
future they hoard the goods so that they can sell them at higher price
later. This will result in a decrease in the supply of goods.
83. Number of Firms
When the number of firms in the market increase the
supply of goods also increases and vice-versa.
84. Law of Supply
There is the direct relationship between the price of a commodity and
its quantity offered for sale over a specified period of time.
When the price of a goods rises, other things remaining the same,
(ceteris paribus). its quantity which is offered for sale increases as and
price falls, the amount available for sale decreases. This relationship
between price and the quantities which suppliers are prepared to offer
for sale is called the law of supply.
The Law of Supply shows the relationship between price and quantity
from the supplier’s point of view.
For Instance, Apple Inc. is an American multinational technology
company headquartered in Cupertino, California and produce different
iphone models. Price of iphone mobile increases, apple company
willing to sell more mobile phones, if price declines, supply/selling of
mobile phones also declines/ willing to sell less if price declines
85.
86. Assumptions of Law of Supply
Assumptions of Law of Supply
The phrase “keeping other factors constant or ceteris
paribus” is used when describing the law of supply. This
expression refers to the following presumptions that the law
is based on:
1. The price of other commodities is constant.
2. The state of technology has not changed.
3. The price of factors of production is constant..
4. The producer’s objectives are constant.
87. Supply Schedule and Supply curve
Supply schedule is a table that shows the quantity supplied at
each price. Supply schedule is a tabular representation of the
various quantities of commodities that are supplied/sold by a
supplier/seller at different price levels over a period
A supply curve is a graph that shows the quantity supplied at each
price.
90. Types of Supply
Individual Supply
Individual supply describes the willingness and ability of an
individual firm/seller to sale a specific quantity of a good or
service at specific price to the market over a given period of
time
Market Supply
Market supply describes the quantity of a specific good or service
that all sellers in a market combined are willing to sell. In other
words, it represents the sum of all individual supplies/sellers/ firms
for a particular good or service
92. Market equilibrium
Market equilibrium is the point where the demand and supply are
equal.
A market is in equilibrium if at the market price the quantity
demanded is equal to the quantity supplied.
96. Elasticity Demand and its Types
In economics Elasticity measures thar responsiveness of one variable to
changes in another variable
the elasticity of demand measures the responsiveness of the quantity
demanded of a good or service to a change in any of the demand
determinants such as price of product, consumer income, price of
related goods etc
Percentage change in the quantity of Demand
----------------------------------------------------------------
Percentage change in the unit price/ other factors
The demand determinants are all the factors that shift the demand like
income, for example. Imagine there is an increase in your income and
you decide to spend more on your favourite books.
97. Computation of Elasticity of Demand
The find out percentage change using following
New value- Old value/old value
%Δ Price: for example the coffee price falls from $4.50 to $3.00,
meaning the percentage change is (3.00−4.50)/4.50 = -33%. Price
has fallen by 33%.
%Δ Quantity: The quantity of coffee sold increases from 4 to 6,
meaning the percentage change is (6−4)/4 = 50%. Quantity has risen
by 50%
Elasticity of demand : %Δ quantity of demand /%Δ price
=50%33% = 1.5*
98. Another Example
Due to a wage bonus, sriram income rises from $100 to
$150 (that is an increase of 50%). He decided to
increase the purchase of books from 20 to 30 (that is an
increase of 50%). His elasticity of demand for is then:
50% / 50% = 1 in absolute value.
99. Types of Elasticity of Demand
:
Types of Elasticity of Demand :
1. Price Elasticity of Demand
2. Income Elasticity of Demand
3. Cross Elasticity of Demand
100. Price Elasticity of Demand
Price Elasticity of Demand : It is a ratio of proportionate/
percentage change in the quantity demanded of a
commodity to a given proportionate/percentage change in
its price.
Percentage change in the quantity of Demand
----------------------------------------------------------------
Percentage change in the unit price
101. Income Elasticity of Demand
Income Elasticity of Demand
The income elasticity of demand is the degree of
responsiveness of the quantity demanded to a change in
the consumer’s income.
Percentage change in the quantity of Demand
----------------------------------------------------------------
Percentage change in consumer income
102. For example, perhaps your customers' average income this year is
$55,000 per year compared to $45,000 last year. You could
perform the following calculations:
Percent change in customer income = (55,000 - 45,000) / 45,000
Percent change in customer income = 10,000 / 40,000
Percent change in customer income = 0.22 or 22%
you 15,000 units this year compared to 10,000 last year. You could
then perform the following calculations:
103. Consumer demand 150 units this year compared to 100
last year. You could then perform the following
calculations:
Percent change in product demand = (150 - 100) / 100
Percent change in product demand = 50 / 100
Percent change in product demand = 0.5 or 50%
Income elasticity of demand = 0.5 / 0.22
Income elasticity of demand = 2
104. Cross Elasticity of Demand
Cross Elasticity of Demand, also represented as XED, is an economic
concept that measures the sensitiveness of quantity demanded of one
good (X) when there is a change in the price of another good (Y),
The formula given to calculate the Cross Elasticity of Demand is given
as:
XED = (% Change in Quantity Demanded for one good (X))
----------------------------------------------------------
/ (Change in Price of another Good (Y))
105. Find the percentage of change in the quantity of demand of
commodity x- samsung mobiles
For example quantity of demand of samsung mobiles increased from is
6,000 to 11,350 units because increase in price of vivo mobile phones
% change in demand of a product = (new product quantity - old product
quantity) / (old product quantity) = (11,350 - 6,000) / (6,000) = 0.89 or 89%.
This indicates that the consumption rate of the new product increases by
89%.
Calculate the percentage of change in selling price of commodity y-
vivo moblies
Assume Price of vivo moblies increased from $ 200 to $ 300 change
in price of a product = (new selling price - old selling price) / (old selling
price) = ($300 - $200) / ($200) = 0.5/ 50 %
CED= 89%/50% = 1.78
106. Consumer Behaviour
Consumer behaviour in economics refers to the actions
and decisions that people make when they are
purchasing products to maximize satisfaction and when
not to purchase products.
Consumer Behaviour is the study of individual
customers, organizations, or groups’ behaviour while
selecting, purchasing, using, and disposing of the goods
Cardinal utility approach
Ordinal unity approach
107. Cardinal Utility Approach
Under the cardinal utility approach, we assume that the utility level
can be measured and expressed in numbers. For example, we can
measure the utility of a commodity, let’s say, chocolates, and say
that a consumer gets 20 units of utility from chocolates.
Ordinal Utility Approach
Even though the cardinal utility approach is simple, it has a major
drawback, as in real-life, we cannot measure their satisfaction level
in numbers. However, consumers can rank our preferences
amongst the alternatives by expressing which commodity gives less
or more utility. For example, there are two commodities, apple and
orange; the consumer consumes both commodities, and likes
apples more than orange . We can say that an apple provides the
consumer with more utility than a orange
108. Law of Diminishing Marginal Utility:
Definition of the Law:
"Other things remaining the same when a consumer takes
successive units of a commodity, total utility increases but the
marginal utility diminishes constantly".
The marginal utility of a commodity diminishes at the consumer
consume larger quantities of it.
In other words states that as we consume more and more units
of a commodity, the utility derived from each successive unit
goes on decreasing. It has universal applicability
Marginal utility is the change in the total utility resulting from
one unit change in the consumption of a commodity per unit of
time.
109. Utility is the satisfaction or benefit derived from
consuming a good or service.
Total utility is the total satisfaction or benefit derived
from consuming a good or service/ It is the aggregate
of satisfaction that a consumer derives from the
consumption of any particular goods or services.
Marginal utility is the change in the total utility
resulting from one unit change in the consumption of a
commodity per unit of time.
110. Assumptions of Law
Assumptions of Law of Diminishing Marginal Utility (Law
of DMU)
• Cardinal measurement of utility.
• Consumption of reasonable quantity.
• Continuous consumption.
• No change in quality
111. Importance of Law
It helps us understand the behavior of a consumer by
looking at the way he spends his income on different
goods and services to attain maximum satisfaction.
It helps to determines quantity of demand for product
To fix tax policies by government
114. Unit 3: Production in Economics
Definition
Production in Economics Definition
In simple words, the definition of production is the
process in which various inputs, such as land, labor, and
capital, are used to produce the outputs in the form of
products or services
115. Production function
In economics, a production function gives the technological relation
between quantities of physical inputs and quantities of output of goods.
A production function is a function that represents the quantity of output
a firm can produce given a certain quantity of input combination.
It refers to the relationship between the quantities of output of production
and the input or factors of production.
The formula for production function is Q= f(K, L, O), where Q is the output, f
refers to function, K is the capital and L stands for labour, O stands for
organization. K, L, O are inputs
116. of the equation, costs. In order to produce, we must employ resources, i.e., land, labor, capital, and entrepreneurship. What happens to output as more resources are emplo
117. Types of Production Function
Short run production function
Long run production function
In the short run production function, only one factor
is variable, while others remain fixed.
118. What is short-run production?
Short-run production in microeconomic theory is when at least
one of the factors of production (land,)is fixed and can’t be
changed and variable inputs changes with level of output
The company can produce more output in the short run by
adding more variable factors to the fixed factors of production.
119. Total Product, Marginal Product, Average Product
• Total Product refers to the total amount of goods and
services produced in a given period of time within a given
input.
• Marginal Product is the change in quantity of total goods
and services when an additional unit of the variable factor
is used.
• Average Product refers to the total product per unit of
variable factors or input. Or total output/Number of
Labours
122. What is Cost of Firm?
A cost is an expenditure incurred by a firm to produce
goods and services when firm purchase inputs or factors of
prounction
Costs of from refer to all the expenses incurred in the process
of creating and delivering a product or service. These
expenses can include purchase of raw materials, labour,
equipment, payment of rent building/ land, and marketing
costs. In simple terms, it is the sum of all expenses necessary
to produce and sell a product or service.
124. What Is Short Run Cost?
the short run is time period is less than one year.. In short run, there are
both fixed and variable costs. In short run, at least one cost is remain
constant that is fixed cost and variable cost changes with level of output .
Fixed costs are the costs that don’t change when production output changes.
For Example cost of construction of building /factory and cost of purchasing
machinery.
Variable costs are the costs that change when production output changes
Other examples of variable costs include:
1. Wages.
2. Basic raw materials (such as wood, metal, iron.)
3. Energy costs.
4. Fuel costs.
5. Packaging costs
.
125. Other Short Run Costs
Total costs
A company’s total costs are made up of the fixed costs
and variable costs added together, as shown in this
formula:
Total Costs (TC) = Fixed Costs (FC) + Variable Costs
(VC)
Total cost is the aggregate cost incurred by a company
of producing a given output level.
127. Average Cost of Production
Average cost
We calculate the average cost of production (also known as the
unit cost) by dividing the firm’s total cost of production by the
quantity of output it produced.
Average Cost (AC)=Total Costs (TC) /No units of goods or Output
(Q)
we can divide average production costs or average total costs into
average fixed costs and average variable costs.
AFC= TFC/NO.Units of output
AVC= TVC/ NO. Units of output
129. Marginal cost
In economics, the marginal cost is the change in
the total cost that arises when the quantity
produced is incremented, the cost of producing
additional quantity.[
133. Long Run Cost
The long run refers to that time period for a
firm is more than one year where it can vary
all the costs are variable/changes that are
fixed costs and variable costs. In long run,
all costs are changes.
134. LAC Curve
Calculation of Long run Average cost: Long un average cost (LAC)
be calculated by the division of LTC by the quantity of output
Derivation of the LAC Curve
Graphically, LAC can be derived from the Short run Average Cost
(SAC) curves by joining all points. In other words, LAC curve that
joins the minimum points of all possible SAC curves, as shown in
the figure. Thus, the LAC curve is also called an envelope curve or
planning curve. The curve first falls, reaches a minimum and then
rises, giving it a U-shape.
The long-run average cost (LRAC) curve shows the firm’s lowest
cost per unit at each level of output, assuming that all factors of
production are variable. The LRAC curve assumes that the firm has
chosen the optimal factor mix with minimum long run average cost
136. Revenue Analysis
What is revenue?
Revenue is the income for business firm earns by selling
goods or services to a customer.
Types of revenues
• Total revenue: Total revenue is the total receipts a
vendor can procure from selling commodities or services
to the customers. ...
• TR = p × q.
• Average revenue: Average revenue is the revenue
initiated per unit of the output sold. ...
• AR = TR/q .
138. Marginal Revenue
Marginal Revenue is the amount of money that a firm
receives from the sale of an additional unit. In other
words, it is the additional revenue that a firm receives
when an additional unit is sold. Hence, we have
MR = TRn – TRn-1
142. What is Union Budget?
According to Article 112 of the Indian Constitution, the
Union Budget of a year, also referred to as the annual
financial statement, is a statement of the estimated
receipts and expenditure of the government for that
particular year.
Types of Government Budget
Balanced Budget
Surplus budget
Deficit Budget
143. Budget at a Glance 2023-24 (Rs crore)
Actuals
2021-22
Budgeted
2022-23
Revised 2022-
23
Budgeted 2023-
24
% change (2022-23
RE to 2023-24 BE)
Revenue Expenditure 32,00,926 31,94,663 34,58,959 35,02,136 1.2%
Capital Expenditure 5,92,874 7,50,246 7,28,274 10,00,961 37.4%
of which:
Capital Outlay 5,34,499 6,10,189 6,20,204 8,37,127 35.0%
Loans and Advances 58,376 1,40,057 1,08,070 1,63,834 51.6%
Total Expenditure 37,93,801 39,44,909 41,87,232 45,03,097 7.5%
Revenue Receipts 21,69,905 22,04,422 23,48,413 26,32,281 12.1%
Capital Receipts 39,375 79,291 83,500 84,000 0.6%
of which:
Recoveries of Loans 24,737 14,291 23,500 23,000 -2.1%
Other receipts (including disinvestments) 14,638 65,000 60,000 61,000
Total Receipts (excluding borrowings) 22,09,280 22,83,713 24,31,913 27,16,281 11.7%
Revenue Deficit 10,31,021 9,90,241 11,10,546 8,69,855 -21.7%
% of GDP 4.4% 3.8% 4.1% 2.9% -29.3%
Fiscal Deficit 15,84,521 16,61,196 17,55,319 17,86,816 1.8%
% of GDP 6.7% 6.4% 6.4% 5.9% -7.8%
Primary Deficit 7,79,022 7,20,545 8,14,668 7,06,845 -13.2%
% of GDP 3.3% 2.8% 3.0% 2.3% -23.3%
144. Budget at a Glance 2023-24 Break Up
Actuals
2021-22
Budgeted
2022-23
Revised
2022-23
Budgeted
2023-24
% change 2022-23
RE to 2023-24
BE
Gross Tax Revenue 27,09,135 27,57,820 30,43,067 33,60,858 10.4%
of which:
Corporation Tax 7,12,037 7,20,000 8,35,000 9,22,675 10.5%
Taxes on Income 6,96,243 7,00,000 8,15,000 9,00,575 10.5%
Goods and Services Tax 6,98,114 7,80,000 8,54,000 9,56,600 12.0%
Customs 1,99,728 2,13,000 2,10,000 2,33,100 11.0%
Union Excise Duties 3,94,644 3,35,000 3,20,000 3,39,000 5.9%
Service Tax 1,012 2,000 1,000 500 -50.0%
A. Centre's Net Tax Revenue 18,04,794 19,34,771 20,86,662 23,30,631 11.7%
Devolution to States 8,98,392 8,16,649 9,48,405 10,21,448 7.7%
B. Non Tax Revenue 3,65,112 2,69,651 2,61,751 3,01,650 15.2%
of which:
Interest Receipts 21,874 18,000 24,640 24,820 0.7%
Dividend 1,60,647 1,13,948 83,953 91,000 8.4%
Other Non-Tax Revenue 1,79,540 1,34,276 1,48,342 1,81,382 22.3%
C. Capital Receipts (without borrowings) 39,375 79,291 83,500 84,000 0.6%
of which:
Disinvestment 13,627 65,000 50,000 51,000 2.0%
Receipts (without borrowings) (A+B+C) 22,09,281 22,83,713 24,31,913 27,16,281 11.7%
Borrowings 15,84,521 16,61,196 17,55,319 17,86,816 1.8%
Total Receipts (including borrowings) 37,93,802 39,44,909 41,87,232 45,03,097 7.5%
145. Expenditure by Ministries
Actuals
2021-22
Budgeted
2022-23
Revised
2022-23
Budgeted
2023-24
% change
(2022-23 RE to 2023-24 BE)
Defence 5,00,681 5,25,166 5,84,791 5,93,538 1.5%
Road Transport and Highways 1,23,551 1,99,108 2,17,027 2,70,435 24.6%
Railways 1,35,242 1,40,367 1,62,312 2,41,268 48.6%
Food and Public Distribution 3,06,571 2,17,684 2,96,523 2,05,765 -30.6%
Home Affairs 1,68,791 1,85,777 1,93,912 1,96,035 1.1%
Chemicals and Fertilisers 1,54,789 1,07,715 2,27,681 1,78,482 -21.6%
Rural Development 1,61,643 1,38,204 1,82,382 1,59,964 -12.3%
Agriculture and Farmers' Welfare 1,22,836 1,32,514 1,18,913 1,25,036 5.1%
Communications 51,545 1,05,407 1,05,478 1,23,393 17.0%
Education 80,352 1,04,278 99,881 1,12,899 13.0%
Jal Shakti 83,467 86,189 74,029 97,278 31.4%
Health and Family Welfare 84,470 86,201 79,145 89,155 12.6%
Housing and Urban Affairs 1,06,840 76,549 74,546 76,432 2.5%
Other Ministries 17,13,022 18,39,751 17,70,613 20,33,419 14.8%
Total Expenditure 37,93,801 39,44,909 41,87,232 45,03,097 7.5%
148. Priorities of the Budget 2023-24
Inclusive Development
Reaching the last mile
Infrastructure and Investment
Unleashing the Potential
Green Growth-
Youth Power and
Financial Sector.
149. Highlights of Union Budget 2023-24
Per capita income has more than doubled to ₹1.97 lakh in
around nine years.
Indian economy has increased in size from being 10th to 5th
largest in the world in the past nine years.
EPFO membership has more than doubled to 27 crore.
7,400 crore digital payments of ₹126 lakh crore has taken
place through UPI in 2022.
11.7 crore household toilets constructed under Swachh
Bharat Mission.
9.6 crore LPG connections provided under Ujjwala.
220 crore covid vaccination of 102 crore persons.
47.8 crore PM Jan Dhan bank accounts.
150. Outlay for PM Awas Yojana is being enhanced by 66% to over Rs. 79,000
crore.
Capital outlay of Rs. 2.40 lakh crore has been provided for the Railways,
which is the highest ever outlay and about nine times the outlay made
in 2013-14.
57 new nursing colleges to be established in co-location with the
existing 157 medical colleges established since 2014.
insurance cover for 44.6 crore persons under PM Suraksha Bima and PM
Jeevan Jyoti Yojana.
Cash transfer of ₹2.2 lakh crore to over 11.4 crore farmers under PM
Kisan Samman Nidhi.
Highlights of Union Budget 2023-24
151. Direct Tax Proposal –Changes
Rebate limit of Personal Income Tax to be increased to
Rs. 3 lakh
Persons in the new tax regime, with income up to Rs. 7
lakh to not pay any tax.
152. The limit for tax exemption on leave encashment on retirement
of non-government salaried employees to increase to Rs. 25 lakh
New co-operatives that commence manufacturing activities till
31.3.2024 to get the benefit of a lower corporate tax rate of 15
per cent, as presently available to new manufacturing
companies
Impact
India aims to be a $5 trillion economy and the manufacturing
sector plays an integral role and the tax incentives will boost
this sector.
Due to Rebate limit of Personal Income Tax to be increased, the
consumer income will increases and results in increases in
consumer spending on goods and services.
153. Indirect Tax proposal- Changes
Minor changes in the basic custom duties, cesses and surcharges on
some items including toys, bicycles, automobiles.
Customs duty on camera lens and its inputs/parts for use in
manufacture of camera module of cellular mobile phone reduced
to zero
Basic customs duty reduced on parts of open cells of TV panels to
2.5 per cent
Basic customs duty reduced on seeds used in the manufacture of
lab grown diamond
Customs Duty on specified capital goods/machinery for electrically
operated vehicle (EV) reduced
Basic customs duty on heat coil for manufacture of electric kitchen
chimneys reduced to 15 per cent from 20 per cent.
Import duty on silver dore, bars and articles increased.
154. Impact
Changes in customs in Budget 2023-24, making some
products cheaper while others costlier. Among the
products that are going to be costlier are gold, sliver
cigarettes, and headphones. Mobile phones, electric
vehicles, and television are going to be cheaper as the
duty has been slashed in the Union Budget 2023
Reduction in customs duties promote exports, boost
domestic manufacturing, enhance domestic value
addition, encourage green energy and mobility.
155. Union Budget 2023-24
Highlights :Infrastructure Sector
Increase in capital expenditure on infrastructure investment by
33 percent, i.e., Rs 10 lakh crore for 2023–24, which is 3.3
percent of GDP.
budget outlay of Rs 3,100 crore will be allocated to build 50
additional airports,
Highest ever capital outlay of Rs 2.4 lakhs crore for Railway
100 transport infrastructure projects for end to end connectivity
of ports, Steel and fertilizer sectors
Impact on Infrastructure Sector
Big boost of investment in Infrastructure has multiplier effect
on economic growth and Employment
Infrastructure-led economic growth to benefit all
Increase in per capita Income people
156. Budget Allocations and its Impact
Highlights: Agriculture Sector
Agriculture Accelerator Fund
Total allocation of funds is 1.25 lakhs crore
20 lakh crore agricultural credit targeted at animal husbandry,
dairy and fisheries
Massive decentralized storage capacity
Digital public infrastructure for agriculture
Impact:
It will enhance agricultural growth
It will increase farmers profitability and income
It will boost agri-startups by young entrepreneurs in
rural areas.
157. Union Budget 2023-24
Highlights: MSME
A corpus infusion of Rs. 9,000 crores undercredit
guarantee scheme for MSMEs
Provided additional Rs. 2,00,000 crores in collateral-
free guaranteed credit
Rs 10,000 crore provision for setting up 200 CBG plants
Impact
It will enhance startups in MSME
It will create more Jobs
It will promote growth in MSME
158. Union Budget 2023-24
Highlights: Energy Sector
The Budget also provides Rs35,000 crore for priority
capital investments towards energy transition
Many programmes for green fuel, green energy, green
farming, green mobility, green buildings, and green
equipment
Impact on Energy Sector
Encourage to set up clean energy projects
Help in reducing carbon intensity of the economy
Large-scale green job opportunities in energy sector
159. Union Budget 2023-24
Highlights: Education
The education sector has received its highest-ever allocation of INR 1.12
lakh crore ($ 13.66 Bn) in the Union Budget 23-24
Allocation for school education has increased by 8 percent from INR
63,449 crore ($ 7.74 Bn) in 2022-23 to INR 68,804 ($ 8.39 Bn) crore in
2023-24
National Digital Library for children
Higher Education Budget is allotted INR 44,094.62 crores
Impact
Promote a more equitable and inclusive education system across India
Equal learning opportunities for learners in urban and rural areas will only
boost the economy.
Expected to significantly expand access to higher education in India,
allowing more people to benefit from the increased opportunities
160. Consumer Durables
A reduction in the income tax slabs for individuals
means that consumers will have more disposable
income, which could be channelled into purchasing
consumer durables.
161. Automobile Sector
Considered a “green Budget”, the Union Budget of 2023
ushers in an era of Electric Vehicles.
Customs duty on import goods and machinery for EVs
have been removed. This is likely to reduce the cost of
EVs manufactured in India and boost Evs manufacturing
Moreover, a 33% increase in capital expenditure, setting
up new airports, as well as new transport infrastructure
projects are expected to drive growth for the
automobile sector.
162. Union Budget 2023-24 and its Overall
Impact
Higher investments in primary sectors, especially agriculture
and fishery, education and upskilling, green power and energy
security, infrastructure development, MSME, manufacturing,
digitalization, and adoption of new technologies will have
positive impact on economic growth and creations of
employment opportunities.
The FY 2023-24 budget allocation will help ensure that Indian
economic growth remains robust and resilient in the face of a
global growth slowdown.
