definitions, terms - goods, utility, value, price and wealth, relationship of economics with the built environment and land use.

1. ECONOMICS
SESSION 6
FACULTY – Ar Mahima J
4-10-2019

2. LEARNING OBJECTIVES
Economics:
i. Definition of economics;
ii. Definitions of terms: Goods ; Utility, Value, Price and Wealth.
iii. The relationship of economics with the built environment and land
use.

4. DEFINITION OF ECONOMICS
The branch of knowledge concerned with the production,
consumption, and transfer of wealth
Economics is a social science concerned with the production,
distribution, and consumption of goods and services. It studies how
individuals, businesses, governments, and nations make choices on
allocating resources to satisfy their wants and needs, trying to
determine how these groups should organize and coordinate efforts
to achieve maximum output.
Economics can generally be broken down into macro-economics,
which concentrates on the behavior of the aggregate economy,
and microeconomics, which focuses on individual consumers and
businesses.

5. TYPES OF ECONOMICS
The study of economics is generally broken down into two disciplines.
Microeconomics focuses on how individual consumers and firm make
decisions; these individuals can be a single person, a household, a
business/organization or a government agency. Analyzing certain aspects of
human behavior, microeconomics tries to explain how they respond to changes in
price and why they demand what they do at particular price levels.
Microeconomics tries to explain how and why different goods are valued
differently, how individuals make financial decisions, and how individuals best
trade, coordinate and cooperate with one another. Microeconomics' topics range
from the dynamics of supply and demand to the efficiency and costs associated
with producing goods and services; they also include how labor is divided and
allocated, uncertainty, risk, and strategic game theory.
Macroeconomics studies an overall economy on both a national and
international level. Its focus can include a distinct geographical region, a country,
a continent, or even the whole world. Topics studied include foreign trade,
government fiscal and monetary policy, unemployment rates, the level of inflation
and interest rates, the growth of total production output as reflected by changes

6. CONCLUSION
Micro- and macroeconomics are entangled; as economists gain an
understanding of certain phenomena, they can help us make more informed
decisions when allocating resources. Many believe that microeconomics'
foundations of individuals and firms acting in aggregate constitute
macroeconomic phenomena.

7. GOODS
A commodity, or a physical, tangible item that
satisfies some human want or need, or
something that people find useful or desirable
and make an effort to acquire it.
Goods that are scarce (are in limited supply in
relation to demand) are called economic goods,
whereas those whose supply is unlimited and
that require neither payment nor effort to
acquire, (such as air) are called free goods.
An economic good is a good or service that has
a benefit (utility) to society. Also, economic
goods have a degree of scarcity and therefore
an opportunity cost.
This is in contrast to a free good (like air, sea
water) where there is no opportunity cost – but
abundance. Free goods cannot be traded
because nobody living by the sea would buy
seawater – there is no point.
However, with economic goods where there is
some scarcity and value, people will be willing

8. GOODS
Another feature of an economic good is
that if it can have a value placed on the
good, it can be traded in the marketplace
and valued using a form of money.
An economic good will have some
degree of scarcity in relation to demand.
It is the scarcity that creates a value
people become willing to pay for. It is the
scarcity which creates opportunity cost.
For example, if we pick apples from a
tree, it means that other people will not
be able to enjoy them. If we devote
resources to mining gold, the opportunity
cost is that we can’t devote this time and
effort to growing corn

9. UTILITY
Utility is a term in economics that refers
to the total satisfaction received from
consuming a good or service.
The economic utility of a good or service
is important to understand, because it
directly influences the demand, and
therefore price, of that good or service. In
practice, a consumer's utility is impossible
to measure and quantify.
However, some economists believe that
they can indirectly estimate what is the
utility for an economic good or service by
employing various models.
The utility definition in economics is
derived from the concept of usefulness.
An economic good yields utility to the
extent to which it's useful for satisfying a

10. VALUE
Value is what goods or services pay you
Economic value is a measure of the benefit provided by a good or
service to an economic agent. It is generally measured relative to units of
currency.
Economic value is not the same as market price, nor is economic value
the same thing as market value. If a consumer is willing to buy a good, it
implies that the customer places a higher value on the good than the
market price
Value can never be calculated in numbers. Value varies from customer
to customer
value is the usefulness of any product to a customer; in other words,
the value is what your customer believes the product or service is worth

11. PARADOX OF VALUE

12. PRICE
Price, the amount of money that has to be paid to acquire a given product. As the
amount – the people are prepared to pay for a product represents its value, price is also a
measure of value
It follows from the definition just stated that prices perform an economic function of
major significance.
 prices provide an economic mechanism by which goods and services are distributed
among the large number of people desiring them.
They also act as indicators of the strength of demand for different products and enable
producers to respond accordingly.
Price is the monetary value of a good, service or resource established during a
transaction. Price can be set by a seller or producer when they possess monopoly power,
and are said to be price makers, or set through the market itself, when firms are price
takers. Price can also be set by the buyer when they posses some monopoly power.
Function of prices may be analysed into three separate functions. First, prices determine
what goods are to be produced and in what quantities; second, they determine how the

13. WEALTH
Wealth measures the value of all the assets of worth
owned by a person, community, company or country.
Wealth is determined by taking the total market
value of all physical and intangible assets owned,
then subtracting all debts.
 Essentially, wealth is the accumulation of resources.
Specific people, organizations and nations are said to
be wealthy when they are able to accumulate many
valuable resources or goods.
Wealth is expressed in a variety of ways. For
individuals, net worth is the most common
expression of wealth, while countries measure by
gross domestic product (GDP), or GDP per capita.

14. MEASURING WEALTH
Money is the most common means of measuring wealth.
The value of a product or material used as the basis for a monetary
system depends on how much others are willing to trade or provide
labor in exchange for it.
Another factor is the degree of universal acceptance the material or
commodity has.
If no one outside a community is willing to accept the money in exchange
for goods or services, it has no value outside of the society that uses it.

15. THE RELATIONSHIP OF ECONOMICS WITH THE BUILT
ENVIRONMENT AND LAND USE.
Socioeconomic Impacts of Land–Use Changes
1) Conversion of farmland and forests to urban development reduces the amount of
available for food and timber production
2) Soil erosion, salinization, desertification, and other soil degradations associated with
agricultural production and deforestation reduce land quality and agricultural
3) Conversions of farmland and forests to urban development reduce the amount of
space and environmental amenities for local residents
4) Urban development reduces the “critical mass” of farmland necessary for the
survival of local agricultural economies
5) Urban development patterns not only affect the lives of individuals, but also the ways
which society is organized.
6) Urban development has encroached upon some rural communities to such an extent
that the community’s identify has been lost
7) Excessive land use control, however, may hinder the function of market forces
8) Land use regulations that aim at curbing land development will raise housing prices,
making housing less affordable to middle– and low–income house-holds

16. THANK YOU