Lecture 1: Introduction to Economics PDF

Lecture #1 INTRODUCTION Difference b/w Economy & Economics Objectives of Economy  What to Produce?  How to Produce?  For whom it will be produced? Types of Economics  Micro Economics vs Macro Economics  Chapter #1 Factors of Productio...

Lecture #1 INTRODUCTION Difference b/w Economy & Economics Objectives of Economy  What to Produce?  How to Produce?  For whom it will be produced? Types of Economics  Micro Economics vs Macro Economics  Chapter #1 Factors of Production(Input): Factors without which output production is not possible. Land: All Natural Resources Labor: Anyone using Physical or Brain power Capital: Assets Organization or Entrepreneur: Group of individuals or Factor that combine all FOP to produce output. FOP= Factors of Production  Chapter #1 Economics is a Science or Arts? Science: Study of facts. Positive Science: Study of Physical facts. Normative Science: Facts based on what ought to be? And what not ought to be? Economics is a Science as well as Arts Prove by the variable of “Price.”  Chapter#1 School of Thoughts: Classical School of thought: (Major contributor is Adam Smith) 1776 A/c to Classical school of thought, “ Economics is a Science of Wealth” This definition was proposed in 1776 in his book called An Inquiry into Nature and causes of Wealth of Nations, Reasons of Failure:  All importance given to wealth and the source of generating wealth which is human being is totally neglected. As all importance given to wealth, people start generating wealth by all false and fair means. Law & order and social system collapsed.  Chapter #1 Neo-Classical School of Thought: (major contributors are Marshall & Pareto) According to this school of thought, “Economics is a Science of Material Welfare” Reasons of Failure: All importance given to material welfare while individuals doing immaterial welfare is totally neglected. Individuals doing immaterial welfare occupy huge proportion of society so, this definition will not reflect every individual of society.  Chapter #1 Modern School of Thought:(Major contributor is Robbins) According to this school of thought, “Economics is a Science of Multiple Ends with Scarce means and alternative uses” Characteristics of Ends/Wants: Unlimited Recur Satiable Always decided on the basis of preference pattern Various modes of satisfaction  Chapter #1 Characteristics of Means/Resources: Limited One mean is utilized for achieving more than one end.