Economics First Year - Untouchability

How to Use the Book

• Chapters provide a comprehensive overview of each topic.
• Introductions contain summaries and key objectives for learner-centric classroom transformation.
• "Think and Do" sections offer intriguing facts and questions for deeper economic exploration.
• Activity directions encourage hands-on learning to enhance understanding of concepts.
• ICT tables enhance computer-based learning and visual representation of functions.
• Conceptual diagrams illustrate relationships between key concepts for schematic learning.
• Glossaries define critical scientific terms for clarity.
• Model question papers are included for evaluation practice.
• Additional references and web links guide further research on topics.

Career Guidance in Economics

• Numerous career paths are available for economics graduates in both private and public sectors.
• Government sectors offer roles such as:
  • Indian Economic Services
  • Reserve Bank of India positions
  • Roles in PSUs and public sector banks
• Private sector opportunities include positions in private banks, MNCs, BPOs, KPOs, and economic journalism.
• Advanced education options like pursuing a Ph.D. in economics can lead to teaching or research roles.
• A BA in economics followed by an LLB can lead to careers in corporate law, while combining a BA in economics and an MBA enhances private sector prospects.

Prominent Universities and Colleges

• Notable institutions offering economics programs include:
  • Delhi School of Economics
  • Sri Ram College of Commerce
  • Jawaharlal Nehru University
  • IIT Kanpur, BITS-Pilani, and Madras School of Economics
  • Various other prominent colleges in Kolkata and Mumbai.
• London School of Economics is recognized globally for its economics programs.

Job Opportunities in Economics

• Graduates can find employment in various sectors:
  • Government jobs in services such as Indian Civil Services and Planning Commissions.
  • Private sector roles in firms like World Bank and IMF.
  • NGO and International Aid Agencies seeking economists and analysts.
• The average salary ranges from Rs. 4 to 8 lakh per annum, with high-earning potential for qualified candidates.

Diverse Careers for Economists

• Potential career opportunities for economics graduates span multiple sectors:
  • Banking: Commodities Broker, Investment Banker, Financial Analyst.
  • Government: Economic Forecaster, Public Administrator, Securities Analyst.
  • Education: Professor, Teacher, Educational Consultant.
  • Business: Market Research Analyst, Management Consultant, Strategic Planner.

Table of Contents Highlights

• Subjects covered include Micro Economics, Consumption and Production Analysis, Cost Revenue Analysis, Market Structures, and the Indian Economy.
• Key chapters cover the evolution of India's economy and its development experiences, alongside mathematical methods pertinent to economics.
• The curriculum is structured with monthly lessons aimed at guiding students’ progression through topics.### Economics: Definitions and Historical Context
• Renamed from "Political Economy" to "Economics" by Alfred Marshall in the late 19th century.
• Various definitions illustrate the development of economic thought through different eras.
• Four key definitions represent significant stages in the evolution of Economics:
  • Smith’s Wealth Definition: Classical Era
  • Marshall’s Welfare Definition: Neo-Classical Era
  • Robbins’ Scarcity Definition: New Age
  • Samuelson’s Growth Definition: Modern Age

Smith’s Wealth Definition

• Adam Smith (1723-1790) defines Economics in "The Wealth of Nations" (1776) as "the science of wealth".
• Emphasizes the wealth generation through individual pursuits of self-interest, guided by an “invisible hand”.
• Advocates the importance of “division of labour” in enhancing productivity.
• Criticism includes an overemphasis on material wealth, neglecting human welfare and ethical considerations.

Marshall’s Welfare Definition

• Alfred Marshall (1842-1924) articulated Economics as the study of mankind's welfare in "Principles of Economics" (1890).
• Shifts focus from wealth to promoting welfare and happiness; considers societal impact and individual well-being.
• Criticism includes:
  • Lack of clarity on welfare’s definition, as it varies widely across individuals and cultures.
  • Potential disregard for non-material contributions to welfare.

Robbins’ Scarcity Definition

• Lionel Robbins (1898-1984) defines Economics as the study of human behavior in relation to scarce resources, published in "An Essay on the Nature and Significance of Economic Science" (1932).
• Highlights the relationship between ends (human wants) and scarce means with alternative uses.
• Criticism includes:
  • Lack of distinction between goods promoting welfare and those that do not.
  • Reduces Economics to resource allocation theory, ignoring broader economic growth components.

Samuelson’s Growth Definition

• Paul Samuelson (1915-2009) offers a comprehensive view, defining Economics as the study of how society chooses to employ scarce resources, published in "Foundations of Economic Analysis" (1948).
• Incorporates aspects such as time, production, distribution, and consumption, applicable to situations involving no currency.
• Highlights the dynamic nature of economic growth, reflecting interactions among individuals and societal groups.

Nature and Scope of Economics

• Economics studies human activities focused on wealth, encompassing both art (practical application) and science (systematic study).
• Concerns itself with human wants and the means to satisfy them, framed by the problem of scarcity.
• Establishes the need for a balance between satisfying wants and available resources through potential supply increases or demand limitations.

Positive and Normative Economics

• Positive Economics: Descriptive analysis of economic phenomena, answering “what is?” and “how does it work?”.
• Normative Economics: Prescriptive aspect dealing with what ought to be, often addressing social values and ethical considerations.

Goods and Services

• Defined in Economics to encompass both material goods and intangible services, satisfying human wants.
• Goods are characterized by tangibility, preservation over time, ownership, transferability, and market value.

Conclusion

• The evolution of Economic thought reflects a broader understanding of its subject matter, continually adapting to societal needs and ethical considerations.
• Recognizes the interplay between wealth, welfare, scarcity, and growth in shaping economic frameworks.### Types of Goods
• Free Goods: Abundant in nature, no cost to use (e.g., air, sunlight); water is scarce now, losing its ‘free good’ status.
• Economic Goods: Scarce resources that require expenditure to own or use.

Goods Classification

• Consumer Goods: Satisfy direct human wants (e.g., food, clothing).
• Capital Goods: Used to produce consumer goods (e.g., machinery) and do not directly satisfy consumer needs.
• Durable Goods: Long-lasting items (e.g., furniture).
• Perishable Goods: Short-lived items (e.g., fruits, fish).

Public vs Private Goods

• Public Goods: Available to all, non-rival in consumption (e.g., national defense). Funded by society.
• Private Goods: Consumed by individuals; excludable and rival (e.g., meals, clothing).

Characteristics of Services

• Intangible: Cannot be physically owned; often tied to experiences or brands.
• Heterogeneous: Quality varies across contexts.
• Inseparable: Services are often produced and consumed simultaneously (e.g., labor).
• Perishable: Cannot be stored; lose value post-usage (e.g., expired tickets).

Utility in Economics

• Definition: Refers to the want-satisfying power of a commodity or service.
• Psychological Aspect: Utility varies based on individual perception and context.
• Utility Types:
  • Form Utility: Value derived from the form of goods (e.g., raw cotton vs. cloth).
  • Time Utility: Value linked to when a good is available (e.g., needing medicine immediately).
  • Place Utility: Importance of the location for value realization (e.g., books available at a library).
  • Service Utility: Derived from services when needed (e.g., legal advice).
  • Possession Utility: Satisfaction from owning a product (e.g., purchasing a book).

Price and Revenue

• Price Definition: Monetary value of goods determined by supply and demand dynamics.
• Total Revenue Formula: TR = P × Q (Total Revenue = Price per unit × Quantity sold).
• Revenue: Income from sales, critical for assessing profit and loss.

Equilibrium Concepts

• Stable Equilibrium: A state where no forces disrupt the current condition; optimal satisfaction or profit level.
• Particular Equilibrium: Focus on one variable (e.g., price of a specific good).
• General Equilibrium: Involves multiple variables affecting the economy as a whole.

Economic Methods

• Deductive Method: Derives specific conclusions from general principles; prominent in classical economics.
• Inductive Method: Forms generalizations through observation and empirical data; associated with the Historical School.

Importance of Microeconomics

• Provides tools for understanding economic mechanisms.
• Aids in policy formulation and resource management.
• Useful for evaluating economic welfare and making informed decisions.

Economic Laws and Their Nature

• Economic laws express trends rather than certainties; they are subject to variability due to human behavior.
• Unlike physical sciences, economic predictions may not always yield consistent results due to the volatility of social factors.

Conclusion

• Understanding goods, services, utility, and economic methods is essential for grasping fundamental microeconomic principles.