subject matter of economics.pptx

subject matter

1. Fundamental Of Economics

2. Introduction to Economics Have you ever heard before what …..is? Economics, Unlimited human wants, Scarcity, Choice, Tradeoff, Opportunity cost, Production, Factors of Production Market,

3. Cont.…. Economics is one of the most exciting disciplines in social sciences. As a body of knowledge, the effective birth of economics as a separate discipline  may be traced back to 18 th century . There was, of course, economics before, the Greeks, Islamic Scholars, Chinese Writers, Middle Ages in Europe all have their contributions to the economics . But existed as unorganized and philosophical.

4. Cont.…. The word economy comes from the Greek word “ oikonomos ” which means ‘ one who manages a household .” In fact, household and society have much in common. Economics deals with many socioeconomic issues, most of which are of immediate concern to us.

5. Definition of Economics Several economists have defined economics taking different aspects into account. Adam smith defined economics as the as the science of wealth Alfred Marshall defined economics as the study of mankind in the ordinary business of life Lionel Robbins defined economics as the science which studies human behavior as a relationship between ends and scarce

6. Cont.…. Prof . Paul Samuelson defined economics as “the study of how men and society choose, to employ scarce productive resources which could have alternative uses, to produce various commodities over time, and distribute them for consumption, now and in the future among the society .

7. Cont.…. Conclusively, economics can be defined; Economics can be defined as; the study of how society manages its scarce resources Economics is the study of the use of scarce resources to satisfy unlimited human wants Two major factors are responsible for the emergence of economics. the existence of unlimited human wants the scarcity of available resources

8. Basic Concepts in Economics Unlimited Human Wants Human wants are unlimited. This means that they are never ending and can never be fully satisfied Resource are scarce This means resources (such as time, money, land, labor, capital and natural resources) are limited according to the unlimited human wants. Choices This means selecting one from number of alternatives . Choices become necessary as a result of scarcity. Making a choice implies giving up something in order to get something else.

9. Cont.…. Opportunity Cost The value of the alternative forgone in order to get the other alternative Rationality This is an economics assumption of that individuals will pick up the alternative which he gains optimum benefit. Production Is the process in which various inputs both Material and Immaterial are used to produce the outputs in the form of products or services.

10. Cont.…. Factors of production Are the resources used in the production process. They can be; land, labor, capital, and entrepreneurship. Market Is a set up where buyer and sellers meet to exchange goods or service for profit.

11. Scope of Economics Economics covers central issues faced by any society. The central questions that economics response are; What to produce How to produce For whom to Produce

12. Branches of Economics In general, economics can de branched in to two main divisions; i) Microeconomics ii) Macroeconomics. However , In the recent past, many new branches of the subject have developed, including Development Economics, Industrial Economics, Environmental Economics, Agricultural Economics , Labor Economics, Behavioral Economics, and so on.

13. Micro economics The word micro is derived from the Greek word mikros meaning small. Microeconomics is a branch of economics that is concerned with the behavior of individual consumers, firms, industries, commodities and prices. It deals with the consumers, producers, firms or industry, individual income, the determination of product price, factor price etc .

14. Macroeconomics The word macro is derived from the Greek word makros meaning large. Microeconomics is a branch of economics that is concerned with how an overall economy—the markets, businesses, consumers , and governments—behave It deals with the overall aggregate/national of microeconomics It analyses with the national output , total employment, national income, aggregate savings and investment etc.

15. Methods of Economic Analysis Economics adopts the usual methods of scientific analysis for the discovery of its laws and principles. Deductive Method or Inductive Method Deductive Method Means reasoning or inference from the general to the particular or from the universal to the individual . Inductive Method is the process of reasoning from a part to the whole, from particulars to generals or from the individual to the universal

16. Deductive Method Here , we descend from the general to particular The deductive method derives new conclusions from fundamental assumptions or from truth. For example any supply and demand analysis you do is the application of generally accepted principles about demand and about supply; therefore, you are engaging in deductive logic.

17. Inductive Method This method mounts up from particular to general The inductive method develops economic theories on the basis of observations and experiments For example data on consumption of poor , middle and rich income groups of people are collected, classified, analyzed and important conclusions are drawn out from the results

18. Normative & Positive Economics Economic concepts can be stated in two different approaches Normative Economic Statement or Positive Economic Statement Positive statement; it is concerned with the question of what is? It is based on data and facts Normative Statement ; It is concerned with the question of what ought to be?. It is based on values, opinions and judgments

19. Cont.…. Examples of Positive Statement scarcity rational self-interest profit maximization Example of Normative Economic Statement Democracy for development Wealth tax for wealth distribution Individual inheritance limit