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Lect-01 Intro to Eco

The document provides an introduction to economics, emphasizing the concepts of scarcity, choice, and opportunity cost. It outlines various definitions of economics from historical figures and discusses different branches such as microeconomics, macroeconomics, and development economics. The key takeaway is that economics studies how individuals and societies make choices to satisfy their needs and wants under conditions of limited resources.

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Lect-01 Intro to Eco

The document provides an introduction to economics, emphasizing the concepts of scarcity, choice, and opportunity cost. It outlines various definitions of economics from historical figures and discusses different branches such as microeconomics, macroeconomics, and development economics. The key takeaway is that economics studies how individuals and societies make choices to satisfy their needs and wants under conditions of limited resources.

Uploaded by

223317
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 15

INTRODUCTION TO

ECONOMICS

L E C T- 0 1
I: Introduction:
 Peoples wants are numerous
and varied.

 But the blunt reality is that


our economic wants far exceed
the productive capacity of our
scarce (Limited) resources.
Scarcity and choices:

 Scarcity restricts options and


demands choices.
 At the core of economics is the

idea that “ there is no free lunch”


 Opportunity costs: To obtain more

of one thing, society forgoes the


opportunity of getting the next
best thing. The sacrifice is the
opportunity cost of the choice.
Purposeful Behavior:
Economic decisions are
“purposeful” or “rational,” not
“random” or “choice”.

 Utility:
the pleasure, happiness,
or satisfaction obtained from
consuming a good or service.

 Rationalself-interest is not the


same as selfishness.
Marginal Analysis
Marginal analysis is the comparisons of
marginal benefits and marginal costs,
usually for decision making.
 Cost and Benefits

 Each option involves marginal benefits


and because of scarce resources,
marginal cost.

 In making choices rationally, the


decision maker must compare those two
amounts
. Definition of
Economics

Economics is the social


science convened with how
individuals, institutions, and
society make optimal (best)
choices under conditions of
scarcity.
Classical Definition – Adam Smith (1776)

 “Economics is the science of wealth.”

 Focuseson the production, distribution,


and accumulation of wealth.

 Smith's
famous work: “An Inquiry into the
Nature and Causes of the Wealth of
Nations.”
Neo-Classical Definition – Alfred Marshall
(1890)

 “Economics is a study of mankind in


the ordinary business of life.”

 Emphasizes human welfare rather than


just wealth.

 Focuseson material well-being and how


people use resources.
Modern Definition – Lionel Robbins (1932)

 “Economics is the science which


studies human behavior as a
relationship between ends and scarce
means which have alternative uses.”

 Highlights scarcity and choice.

 Applies
to all human decisions, not just
about money.
Keynes’ Definition of Economics –

John Maynard Keynes (1883–1946) was a


British economist who is widely regarded as
one of the most influential economists of the
20th century. He fundamentally changed the
way governments think about and manage the
economy

He viewed economics as:

“The study of the causes of general unemployment,


income, and output in the economy.”
Dr. Amartya Sen
Nobel Prize in Economics (1998) – For his
work on welfare economics
Capability Approach
•Instead of just measuring development by income
(like GDP), Sen argued that development should
be about what people are able to do and be –
their capabilities.
Example: A person having access to food doesn't
mean they are well-nourished if they are sick and
can't eat.
Famous Quote:
“Development is freedom.”
DIFFERENTS TYPES OF ECONOMICS
In economics, there are several main types
or branches, each focusing on different
aspects of the economy. The most common
types are:

1. Microeconomics
•Focuses on individual units like households, firms, and
industries.

•Studies supply and demand, pricing, consumer behavior, and


production at the micro level.

Example Topics: Price determination, consumer choice, cost


of production.
2. Macroeconomics
•Deals with the economy as a whole.
•Examines national income, inflation, unemployment,
economic growth, and monetary/fiscal policy.
Example Topics: GDP, inflation rate, unemployment rate,
government spending.

3. Development Economics
• Focuses on economic growth and development in low-
income countries.
• Studies poverty, income distribution, education, and
sustainable development.
Example Topics: Human development index (HDI),
poverty reduction strategies.
4. International Economics
•Analyzes economic interactions between countries.
•Covers trade, exchange rates, balance of payments,
and globalization.
Example Topics: Free trade, tariffs, foreign exchange
markets.
5. Environmental Economics
• Focuses on the relationship between the economy and
the environment.
• Deals with pollution, natural resource management, and
climate change.
Example Topics: Carbon pricing, sustainable resource
use.
6. Public Economics
• Studies government revenue and expenditure.
• Analyzes taxation, public goods, and fiscal policy.
Example Topics: Tax policy, government budgets,
subsidies.
End Note:

 In a world of scarcity, the decision to obtain the


marginal benefit associated with some specific
option always includes the marginal cost of
forgoing something else.

 Simplified Definition
 “Economics is the study of how people make
choices to satisfy their needs and wants with
limited resources.”

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