solutions to basic economic problems - all

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Click to edit Master subtitle style4/15/12

Scenario

Jake used his

creativity to make

different kinds of

cards. He made verylittle money out of

his little business.

His friend suggestedthat he buy an Apple

laptop and with its

many features create


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Profit and Loss

Sum I - Handmade

cards.

Raw material and

labor: 5

Selling price/card:10

Cards made per

day: 50

Sum II Mac book

Raw material,technology and

labour: 7

Selling price/card:

10

Cards made per

day: 1000


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Solutions toBasic Economic Problems


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Definition

Capitalism is aneconomic system inwhich the means of

production areprivately owned andoperated for profit,usually in competitive

markets.

Example: U.S.

Is it true today?


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History

First introduced in the mid-19th century by KarlMarx

Pure capitalism has long since disappeared, as

governments in the United States and manyother countries have intervened in theireconomies to limit concentrations of power andaddress many of the social problems associated

with unchecked private commercial interests U.S. economy is a mixed economy and not

capitalist
http://economics.about.com/od/unitedstates/http://economics.about.com/od/unitedstates/


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Today

The individual who comes closest to being theoriginator of

contemporarycapitalism is theScottish philosopherAdam Smith, who

sought to show how itwas possible to pursueprivate gain in waysthat would further not

just the interests of the


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Consumerdecides thequantity tobe produced

Basic aim is profitmaximization Better technology Low cost of

production

Capitalism

Consumers freedom ofchoice

Solutions to

Basic Economic Problems



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Consumers Freedom of Choice

A business man wanted to start a new businessin Mumbai, but he doesnt know what it shouldbe.

Can you help him decide? If he is to start a book business, will he only

produce one size of books?

Why?

Suppose you were to go to a shop, will you get tochoose the size of books that you require?

Whose choice decided the size of books in thefirst place?

In a capitalist economy the consumers decide what



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production

Capitalism


Solutions to




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Consumer decides thequantity to be produced

Edward has a business of making ceiling fans. Herealizes there are more and more consumersasking for A/Cs.

The economically backward people are at a lossin this type of an economy.



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production

Capitalism


Solutions to




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Profit Maximisation

What are the things that youmight want from your AC?

What will Edward do to provideall these demands?

What will happen to the cost ofproduction?

How is that covered?

Give some other exampleswhere the use of technologyhelps?

Better technology+ Following

parameters set bythe consumer =Profit Maximization


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production

Capitalism


Solutions to



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1C 4M

5C

2D

S

3M

C TR

T

Across1. An economy guided by

consumers demand

2. There is an interrelationbetween the two:_________-

___________

3. The producer aimsat_____________ ______

Down

4. Capitalist says, My aim is to________ _________

5. Whose needs give theparameters of production ?


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C A P I T A L I S M

A

X

C I

O M

N US M

D E M A N D S U P P L Y

M R

M I N I M I Z E C O S T

R F

I

T


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Read more:www.pptpalooza.net/PPTs/GlobalStudies/IndiaSinceIndepen


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Jawarlal Nehru

Ally of Gandhi.

1st Prime Minister

of India, 1947-1964.

Advocated Industrialization.

Promoted Green

Revolution.

Mixed Economy.

Nonaligned Movement.


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Nonaligned Movement.


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Indias mixedeconomy

The mix refers to private andpublic ownership.

Foreign aid and foreign investment

are crucial. Urban areas have high-tech

companies.

Three quarters of the population arefarmers living in small villages.

India's "Green Revolution" allowed

farmers to triple their crop by using


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Importance to publicsector post

independence To establish socialistic pattern of society

To lay importance on heavy and basic

industries like iron and steel To get rid of monopolies and restrictive

trade practices

i d i l li


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industrial policyresolution 1948

Read more:

State Monopoly Mixed Sector Governmentcontrolled

PrivateSector

Arms andammunition

Coal Automobiles All others

Atomic Energy Iron and Steel HeavyMachinery

Rail Transport AircraftManufacturing

HeavyChemicals

Ship Building Fertilizers

Telephone,telegraph and

Sugar


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Industrial PolicyResolution

Focus

1948 Increase Industrialization1956 State given direct responsibility as

capital was less and entrepreneurshipwas not strong enough

1973 Identified high priority and foreigncompanies

1977 Decentralization and cottage industries

1980 Technological upgradation

1985 - 86 Increase in productivity and quality and

Industrial PolicyResolutions through the

years


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W I P R O

R B I

N

D

I H L

M A R U T I

P L C

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