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 companiesa 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 18th 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, and3. 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.