Fundamental of agriculture economic.pdfFundamental of agriculture

Fundamental of agriculture

1. VivekanandAgriculture College, Hiwara(Bk.)
Lecture Presentation
Of
ECON-121 CREDITS: 2+0=2
Title: Fundamentals of Agricultural Economics
Course Teacher
MangeshM. Jakate
Asstt. Professor
Department of Agricultural Economics
VAC, Hiwara

2. Lecture no.1
•Economics –Meaning,
•Definitions,
•Subject matter of Economics –
•Traditional approach –
consumption,
production,
exchange and
distribution

3. Is Economics a Science or an Art ?
•Scienceis a systematized body of knowledge in which
the facts are so arranged that they speak for
themselves. Judged by this standard, economics is
certainly a science.
•Economics is also an art because it lays down precepts
or formulas to guide people to reach their goals.
Economics therefore is a science as well as an art.
•Economics –A Social Science
Economics deal with the activities of people living
in an organized community or society, in such
activities which relate to the earning and use of wealth
or with the problems of scarcity, choice and exchange.
Hence it called a social science.

4. Positive Economics and
Normative Economics:
•1. Positive economics is concerned with “what is”
whereas Normative economics is concerned with
“what ought to be”.
•2. Positive economics describe economic behaviors
without any value judgment while normative
economics evaluate them with moral judgment.
•3. Positive economics is objective while normative
economics is subjective.
•4. The statement, “ Price rise as demand increase”
is related to positive economics, whereas the
statement, “ Rising prices is a social evil” is related
to normative economics.

5. DEFINITIONS OF ECONOMICS
Thewordeconomicshasbeenderivedfromthe
GreekWord“OIKONOMICAS”with“OIKOS”
meaningahouseholdand“NOMOS”meaning
management.Kautilya(“AryaChanakya”),thegreat
Indianstatesman,namedhisbookonstatecraftsas
“Arthashastra”.

6. WEALTH DEFINITION OF ECONOMICS :
•Adam smith defined Economics as . . .
“ An enquiry into the nature and causes
of wealth of nations”
in his book, entitled “ Wealth of Nations”.
He is regarded as the “Father of Economics”.
•Criticisms of Adam smith definition:

7. WELFARE DEFINITION OF ECONOMICS :
•Dr. Alfred Marshall in his book “Principles of Economics” defined as
“PoliticalEconomyorEconomicsisastudyofmankindintheordinary
businessoflife,itexaminesthatpartofindividualandsocialaction
whichismostcloselyconnectedwiththeattainmentandwiththe
useofthematerialrequisitesofwell-being.”
•Criticisms of Alfred Marshall definition:

8. SCARCITY DEFINITION OF ECONOMICS:
Inhispublication“AnEssayontheNatureandSignificanceofEconomic
Science”LionelRobbinsformulatedhisconceptionofEconomicsbasedon
thescarcityconcept.
“Economicsisthesciencewhich
studieshumanbehaviorasarelationship
betweenendsandscarcemeanswhich
havealternativeuses.”CriticismstoDr.RobbinsDefinition

9. GROWTH DEFINITION OF ECONOMICS:
Lord John Maynard Keynes is known as the
Father of Modern Economics. He defined economics as
“Thestudyoftheadministrationof
scarceresourcesandofthedeterminants
ofemploymentandincome”.

10. Subject matter of economics
Economicshassubjectmaterofitsown.
Economicstellshowamanutilizeshislimitedresources
forthesatisfactionofunlimitedwants.Manhaslimited
amountoftimeandmoney.Heshouldspendtimeand
moneyinsuchawaythathederivesmaximum
satisfaction.Amanwantsfood,clothingandshelter.To
getthesethingshemusthavemoney.Forgettingmoney
hemustmakeaneffort.Effortleadstosatisfaction.
Thus, sumsupthe
subjectmaterofeconomicsinitiallyinaprimitivesociety
wheretheconnectionbetweenwantseffortsand
satisfactionisdirect.
Wants -Efforts -Satisfaction

11. Divisions of Economics
Thesubjectmatterofeconomicscanbeexplainedundertwoapproachesviz.,Traditionalapproachand
Modernapproach.
TraditionalApproachItconsideredeconomicsasascienceofwealthanddivideditintofourdivisionsviz.,
consumption,production,exchangeanddistribution
1.Consumption:Itmeanstheuseofwealthtosatisfyhumanwants.Italso
meansthedestructionofutilityoruseofcommoditiesandservicestosatisfy
humanwants.
2.Production: Itisdefinedasthecreationofutility.Itinvolvesthe
processesandmethodsemployedintransformationoftangibleinputs(raw
materials,semi-finishedgoods,orsubassemblies)andintangibleinputs(ideas,
information,know-how)intogoodsorservices.
3.Exchange: Itimpliesthetransferofgoodsfromonepersonto
theother.Itmayoccuramongindividualsorcountries.Theexchangeofgoods
leadstoanincreaseinthewelfareoftheindividualsthroughcreationofhigher
utilitiesforgoodsandservic
es.
4.Distribution: Distributionreferstosharingofwealththatis
producedamongthedifferentfactorsofproduction.
Go to Lecture No. 2