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Introduction to economics,{economics}

This document provides an introduction to economics, including definitions and the scope. It discusses how economics is the management of household resources. Three main definitions are outlined: wealth oriented by Adam Smith, welfare oriented by Marshall, and scarcity oriented by Robbins. Economics is described as both a science and an art. It covers topics such as consumption, production, exchange, distribution, and public finance. Microeconomics focuses on individual goods and services, while macroeconomics looks at total national output and income.

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INTRODUCTION TO ECONOMICS, THEORY OF DEMAND & SUPPLY
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.
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.
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
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.
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.
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?
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.
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.
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.
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.
Scope of economics Scope of economics Consumption Distribution Production Exchange Public finance
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.
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.
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.
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.
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.
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.
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.