Economics

A study of how people organize the

use of resources to satisfy their
wants.

Learning outcomes
At the end of the lecture you will be able to
Define the economics
Explain its main branches
Explain how it came into existence as a social
science ?
Explain the scope of economics
Define the fundamental economic problems
Explain on resources
Define the production
History of Economics
Runs parallel to the history of humankind

Hunter Gatherer
Famer
With the becoming
a farmer land got a
tremendous s
values
History of Economics
Cultivating lands
Producing foods
History of Economics
With the increase of the value of land
government was initiated to control and
protect the land.
Usage of money
Before money come into roll they use good
exchange method (Barter system)
Then they use gold
Gold was held by the gold bearer he gave a
certificate how much gold the particular
person has deposited.
This led the system of banking
Barter system
Deficiencies of barter system
Person who has rice and person who has a
chicken
Cattle owner and farmer


Gold exchange
Scarcity of the metal
Values of silver and gold increased in latter
period
History of Economics
Greek and Roman economic thoughts
Scholastic economic thoughts

Greek and Roman economic thoughts

Political economic
Technical Economic
Political Economic
city-state self-sufficiency, division of labour,
property, money, demand, exchange, interest,
value/price theory, population,
Key points in the history of economics
1500
1600

1700

Exploration
Dutch economic
domination
Adms smit wealth of
nations
Age of exploration
At this period western explorer compel to
seek the unknown places of world to wide of
their economic empire
Dutch economic domination

East indies company
Its origins were much humbler. On 31 December 1600, a
group of merchants who had incorporated themselves into
the East India Company were given monopoly privileges on all
trade with the East Indies. The Company's ships first arrived in
India, at the port of Surat, in 1608.
Joint stock companies
a company whose stock is owned jointly by the
shareholders.

Adam Smith
Adam smith is considered as the father of
modern economics. His text called wealth of
nation is the magnum opus of the field of
economics
Adam Smith
He tried to develop economic through the
capitalism, he said that,
Free triad is good,
Self interest is good
therefore adam smith is known as the most
articulate defender of capitalism


Karl Marx
At the letter part of the 18
th
century Karl marx
arose against the capitalism of adam smith
and brought a new theory into play as
communism or socialism
Important events
Agricultural revolution
Industrial revolution



History of Economics
As population grew up government engage
more and more with land control.
People who were in power always try to
control the land there arise class differences.
Scope of Economics

Economists limit themselves to those things
which are exchangeable.
All the scarce goods which are exchangeable
are called as economical goods and.
All others are called as non economical goods.
Scope of Economics
But at present some have limited the
economist to study how people go about
more and more economic goods.
In this connection Sickle says that, " people
who don't understand this often ask that, you
are an economist why aren't you rich. We are
more regret than you do that you cannot tell
you how to get rich. So economic is not
method of getting more but economic is a
method of how group of people organizing
the use of resources to accomplish this goal".

Main concepts should be discussed
under the filed of economics
Resource
Production
Resources
There are two broad class of resources as
Human resources
Natural resources.
Human resources
Physical and mental abilities of human.
Natural resources
Minerals
Land
Forests
Sand
Stones
Economics and resource management
As humans we apply our physical strength and
intelligence to the resources provided by the
nature. Outcome result of this combination is
something which satisfies human wants, may
be a vehicle, a loaf of bread, butter etc.
Production
This act of creating something new and satisfy
human wants is known as production. But in
modern society production is not a single act
it is series of acts, performed by different
people, in different places at different periods
of time. In other words in each steps to last
sale of the product, from service to consumer
all the acts are parts of the production
Critical issues on production
There are some critical decisions to be made on
wants for the goods and services produced by
using resources. Those critical decisions which
must to be made are,
What things are to be produced and in what
amounts
To what task is each unit of natural resources are
to be assigned.
When the production is made how much of its
share is each person to be received
The arrangement used to make these decisions in
any society is called as economic organization.

Economic Problems

In any society human wants are unlimited if
one want is satisfied another appears soon.
For instance when the human being satisfied
with basic needs then some secondary needs
appear very soon. But the thing we have to
consider in here is in comparison with the
unlimited wants of human beings resources
which can be used for the satisfaction are
remain limited.

Economic Problems
The main economic problems faced by every
society are:
1. Unlimited human wants,
2. Limited availability of resources to satisfy
those wants, and
3. Fulfillment of unlimited wants with
limited resources


Unlimited human wants

Evert human being require varieties of goods and
services to maintain and improve his or her stand
of life. Whenever they satisfied with the basic
needs they compel to follow the secondary
needs. When they have cloths foods, and shelters
they want education, computers, vehicles, they
want to make the home luxurious etc. in modern
society with the pressure of fashion and
advertisement wants are increasing just like the
untiring waves in sea.

Limited availability of resources to
satisfy those wants

Compared to the unlimited wants of human
beings for various goods and services
remaining resources are seems to be
insufficient. It indicates that event all these
available resources are fully employed only
the very small portion of human wants can be
satisfied. So, scarcity of resources is an
important reason behind the economic
problem in any society.

According to the modern economist all
economic problems can be discussed under
following heads

Main
economic
problems
How to
produce
For whom to
produce
What to
produce

In short, these are called the What, How and
for Whom questions.

Professor Paul samulson is the main figure
who explained the working of economic
system through these three questions.
According to samulson main function of
economic is answer to these three questions.

Theory of Malthas
Thomas Robert Malthus was the first
economist to propose a systematic theory of
population.
Geomantic progression and arithmatic
progression
Deficiencies of Modern Economics
Unable to understand the difference between
wants and need
Giving priority to satisfaction than the
availability of resources
Imbalance of production and consumption

Reasons for disefficiencies

Based on materialism
With the industrialization alluring or produce
things as possible
Appearance of market as the major enforce of
industrialization
Market always defend on the profit without
ethics

Buddhist economics
The Buddhist point of view takes the function
of work to be at least threefold
to give a man a chance to utilize and develop
his faculties
to enable him to overcome his ego-
centeredness by joining with other people in a
common task
to bring forth the goods and services needed
for a becoming existence.

It is clear, therefore, that Buddhist economics
must be very different from the economics of
modern materialism, since the Buddhist sees
the essence of civilization not in a
multiplication of wants but in the purification
of human character. Character, at the same
time, is formed primarily by a man's work.
And work, properly conducted in conditions of
human dignity and freedom, blesses those
who do it and equally their products.