This document provides an introduction to economics. It outlines several learning objectives, including analyzing the concept of economics, understanding how economics plays a role in life, and comprehending the scope of economics. Several key economic terms are defined, such as economic goods, income, and scarcity. The document also discusses the theoretical and practical importance of economics. It explains the subject matter of economics deals with wealth and scarce resources. Finally, it provides overviews of various economic theories, concepts, and branches of economics such as microeconomics, macroeconomics, international economics, and managerial economics.

1. INTRODUCTION TO
ECONOMICS
Dr. Ranjana Agarwal

2. Learning Objectives
 To analyze the concept of
economics
 To know how Economics plays a
role in one’s life
 To understand the scope of
economics

3. Economic Terms
 Economic good, Economic activity
 Income and employment
 Economic development
 Choosing between alternative
choices with limited resources

4. Importance of Economics
Theoretical Economics Practical Importance
 Informative  Professional value
 Mental Training  Useful for
 Analyse functioning of householders
economic system  Useful for labour
 Teaches mutual leaders
dependence  Solving problems of
 Useful citizenship poverty
 Wages

5. Subject matter of Economics
 Deals with wealth
 Scarce means i.e. limited resources
 Unlimited wants
 Alternative uses of scarce means
 Scarcity & Efficiency are twin themes of
economics
 A rational consumer will use scarce
resources in most efficient manner

6. Definitions of Economics
 Adam Smith, ‘An inquiry into the
nature and causes of wealth’, 1776
 Marshall, ‘A study of mankind in
ordinary business in life, it examine
that part of individual and social
actions which is closely related with
attainment and use of material
requisites’

7. About Economics
 Economics is a science which studies
human behavior as a relationship
between ends and scarce means which
have alternative uses (Robbins).
 Economics – science or art
 Positive or normative
 Land, labour, capital , organisation

8. Stages of Economic Evolution
 Hunting and fishing stage
 Pastoral stage
 Agricultural
 Handicrafts stage
 Domestic stage
 Industrial stage
 Services led economy – knowledge

9. Questions before Economists
 What to produce  Type of Economies
 How to produce
 For whom to  Capitalist or free
produce market economy
 Socialist Economy
 Mixed Economy

10. Process of Economy
 Production
 Consumption
 Investment
 Factors of Production
 Land, Labour, Capital, Organization
 Division of labor ----Specialisation

11. A production possibility curve
8
7
6
Units of food (millions)
5 Units of food Units of clothing
(millions) (millions)
4
8m 0.0
7m 2.2m
3 6m 4.0m
5m 5.0m
4m 5.6m
2
3m 6.0m
2m 6.4m
1 1m 6.7m
0 7.0m
0
0 1 2 3 4 5 6 7 8
Units of clothing (millions)

12. Opportunity Cost
 What is opportunity cost?
 Does IMT education involve any
opportunity cost?

13. Branches of Economics
 Microeconomics  Macroeconomics
 Study of individual  Studies economy as a
units as firm or whole. It is aggregate
household. How in character and takes
individuals make the entire economy as
choices. a unit of study.
 Price theory  Eg. GDP of India,
 Provides main source population etc.
of decision making
 Eg.Airtel sales

14. Different subjects in Economics
 International economics
 Growth
 Banking
 Economic history
 Agriculture economics
 Applied economics……..

15. Real Life examples
 Euro Disney
 Multinational product and pricing
 Building a bridge (funding a public project)
 An R & D decision (uncertainty and decision)
 Air fare pricing
 Movies tickets pricing

16. The Changing Environment of
Economics
 Globalization of Economic Activity
 Spread of IT
 Dismantling of tradition hierarchy
 Information or knowledge Economy
 Technological Change
 Telecommunications Advances
 The Internet and the World Wide Web

17. Macro Economics – Term 2
 Formulation and execution of
economic policies
 Income
 Employment

18. Macroeconomics
 Growth rates, GDP
 Global recession
 Business Cycles, Unemployment
 Exchange rates (Yuan – effect on
other countries)
 Euro crisis
 Inflation
 Interest rates

19. Business Environment - term 3
 Purchasing power
 Foreign companies in India
 1991 – before and after, LPG
 CSR
 Corporate governance
 Foreign Universities bill
 IPL and after…….

20. Term 1 – Microeconomics - ME
 Price theory applied to managerial
principles

21. What is Managerial Economics?
 Managerial Economics =
Management + Economics.
 Management deals with principles
helping in decision making under
uncertainty and improves efficiency
 Economics provides propositions for
optimum allocation of scarce
resources for achieving goals

22. How does ME help managers?
E c o n o m ic s : B u s in e s s
T h eo ry an d M anagem ent -
M e t h o d o lo g y D e c is io n p r o b le m s
M a n a g e r ia l E c o n o m ic s
A p p lic a t io n o f E c o n o m ic s
t o s o lv in g b u s in e s s
p r o b le m s
O p t im a l s o lu t io n t o
b u s in e s s p r o b le m s

23. THANK YOU