The document is a series of lecture notes from Prof. Prasad Joshi on key concepts in economics. It defines economics as the study of how people make choices to cope with scarcity. It then distinguishes between microeconomics, which examines individual markets, and macroeconomics, which looks at whole economies. It also outlines some basic economic goals and concepts like economic growth, stability, and markets. Finally, it defines important economic agents like households, firms, government and their roles, as well as the four factors of production - land, labor, capital and entrepreneurship.

1. - Prof. Prasad Joshi
Prof.
Prasad
Joshi
24
August
2011

2. — When wants exceed the resources available to satisfy
them, there is scarcity
— Faced with scarcity, people must make choices
— Economics is the study of the choices people make to
cope with scarcity
— Choosing more of one thing means having less of
something else
— The opportunity cost of any action is the best
alternative forgone
Prof.
Prasad
Joshi
24
August
2011

3. The study of the decisions of people and businesses and
the interaction of those decisions in markets. The goal of
microeconomics is to explain the prices and quantities of
individual goods and services.
Prof.
Prasad
Joshi
24
August
2011

4. The study of the national economy and the global
economy and the way that economic aggregates, grows
and fluctuates. The goal of macroeconomics is to explain
average prices and the total employment, income, and
production.
Prof.
Prasad
Joshi
24
August
2011

5. Production costs are as low as possible and consumers
are as satisfied as possible with the combination of
goods and services that is being produced.
Prof.
Prasad
Joshi
24
August
2011

6. The increase in incomes and production per person. It
results from the ongoing advance of technology, the
accumulation of ever larger quantities of productive
equipment and ever rising standards of education
Prof.
Prasad
Joshi
24
August
2011

7. The absence of wide fluctuations in the economic
growth rate, the level of employment, and average
prices
Prof.
Prasad
Joshi
24
August
2011

8. A mechanism that allocates scarce resources among
alternative uses. This mechanism achieves five things:
What,
How,
When,
Where,
Who
Prof.
Prasad
Joshi
24
August
2011

9. — Household - Any group of people living together as a
decision-making unit. Every individual in the
economy belongs to a household
— Firm - An organization that uses resources to produce
goods and services. All producers are called firms, no
matter how big they are or what they produce. Car
makers, farmers, banks, and insurance companies are
all firms
Prof.
Prasad
Joshi
24
August
2011

10. — Government - A many-layered organization that sets
laws and rules, operates a law-enforcement
mechanism, taxes households and firms, and provides
public goods and services such as national defense,
public health, transportation, and education
— Market - Any arrangement that enables buyers and
sellers to get information and to do business with each
other
Prof.
Prasad
Joshi
24
August
2011

11. — Land - Natural resources used to produce goods and
services. The return to land is rent
— Labor - Time and effort that people devote to
producing goods and services. The return to labour is
wages
— Capital - All the equipment, buildings, tools and other
manufactured goods used to produce other goods and
services. The return to capital is interest
— Entrepreneurial ability - A special type of human
resource that organizes the other three factors of
production, makes business decisions, innovates, and
bears business risk. Return to entrepreneurship is
profit.
Prof.
Prasad
Joshi
24
August
2011

12. Prof.
Prasad
Joshi
24
August
2011