dinker vaid ppt on indian economics
TRANSCRIPT
INDIAN ECONOMICS
PGDM 2DINKER VAID
Definition of Economics Starts From ScarcityAll economic questions arise because we are unable to satisfy all our wants.Our inability to satisfy all our wants is called scarcity.Economics is the social science that studies the choices that we make as we cope with scarcity and the institutions that have evolved to influence and reconcile our choices.
A Definition of Economics
Economics is the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided.
Economics is the study of how scarce resources are allocated among conflicting demands.
Economics: A Social Science
Economists cannot easily do experiments.To isolate the effect of interest, economists use the logical device called ceteris paribus, or “other things being equal.”Economists try to isolate cause-and-effect relationship by changing only one variable at a time, holding all other relevant factors unchanged.
Economics: A Social Science
Economists cannot easily do experiments.To isolate the effect of interest, economists use the logical device called ceteris paribus, or “other things being equal.”Economists try to isolate cause-and-effect relationship by changing only one variable at a time, holding all other relevant factors unchanged.
THE TYPESMicroeconomicsMicroeconomics is the study of choices made by individuals and businesses, the way these choices interact, and the influence that governments exert on them.MacroeconomicsMacroeconomics is the study of the effects on the national and global economy of the choices that individuals, businesses, and governments make.
The Scope of Economics
EXAMPLES OF MICROECONOMIC & MACROECONOMIC CONCERNS
Microeconomics
Production
Production/Output inIndividual Industries andBusinesses
How much steelHow many officesHow many cars
Prices
Price of IndividualGoods and Services
Price of medical carePrice of gasolineFood pricesApartment rents
Income
Distribution of Incomeand Wealth
Wages in the auto industryMinimum wagesExecutive salariesPoverty
Employment
Employment byIndividual Businesses &Industries
Jobs in the steel industryNumber of employees in a firmNumber of accountants
Macroeconomics
NationalProduction/Output
Total Industrial OutputGross Domestic ProductGrowth of Output
Aggregate Price Level
Consumer pricesProducer PricesRate of Inflation
National Income
Total wages and salariesTotal corporate profits
Employment andUnemployment in theEconomy
Total number of jobsUnemployment rate
1. To Learn a Way of Thinking...
Three Fundamental Concepts of Economic Thinking
Opportunity CostMarginalismInformation, Incentives, and Market
Coordinations
Opportunity CostsThe opportunity cost of something is
that which we give up when we make that choice or decision.
The implication is that all decisions involve trade-offs.
“There’s no such thing as a free lunch!!”
Margins and IncentivesPeople make choices at the margin, which means that they evaluate the consequences of making incremental changes in the use of their resources.The benefit from pursuing an incremental increase in an activity is its marginal benefit.The opportunity cost of pursuing an incremental increase in an activity is its marginal cost.
2. Understanding Society
Present and past economic decisions have an enormous influence on the character of life in a society.
The state of our physical environment, the level of material well-being, and the nature and number of jobs are all products of the economic system.
Three Big Microeconomic
Questions Goods and services are the objects that people value and produce to satisfy wants…
Microeconomics seeks to understand what determines:-1. WHAT goods and services are produced?2. HOW goods and services are produced?3.FOR whom goods and services are produced?
Three Big Microeconomic
QuestionsHow are Goods and Services Produced?Factors of production are the resources that businesses use to produce goods and services.They are grouped into four categories:
Land Labour Capital Entrepreneurship
Three Big Microeconomic
QuestionsThe “gifts of nature” that we use to produce goods and services are land.The work time and effort that people devote to producing goods and services is labour.The quality of labour depends on human capital, which is the knowledge and skill that people obtain from education, on-the-job training, and work experience.
Three Big Microeconomic
Questions
The tools, instruments, machines, buildings, and other constructions that are used to produce goods and services are called capital.The human resource that organizes land, labour, and capital is entrepreneurship.
Three Big Microeconomic
QuestionsFor Whom are Goods and Services Produced?Who gets the goods and services depends on the incomes that people earn. Land earns rent. Labour earns wages. Capital earns interest. Entrepreneurship earns profit.
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