Introduction to Economics

Needs vs. Wants

• Needs: Essential for survival (e.g., food, clothing, shelter).
• Wants: Non-essential desires for goods/services (e.g., dining out, accessories).

Goods and Services

Goods

• Definition: Tangible items you can touch and hold.
• Examples: Books, cars, cups.
• Classification:
  • Consumer Goods: Directly used for consumption (e.g., food, clothes).
  • Capital/Producer Goods: Used to produce other goods (e.g., machines, tools).
  • Private Goods: Sold by private firms (e.g., cars, books).
  • Public/Social Goods: Provided by the government (e.g., public parks).

Services

• Definition: Actions performed by others; intangible.
• Examples: Medical check-ups, food delivery, car repair.

Human Activities

Economic Activities

• Purpose: To earn money.

Non-Economic Activities

• Purpose: Done out of love, respect, or charity.
• Examples: A mother teaching her child at home.

Origin of Economics

• Etymology: From Greek words "oikus" (household) and "nomus" (management).
• Key Definitions:
  • Adam Smith: Father of Economics; economics as a science of wealth of nations.
  • Alfred Marshall: Economics is the study of mankind in ordinary business life.
  • Lionel Robbins: Economics studies human behavior as a relationship between ends and scarce means.
  • P.A. Samuelson: Economics is concerned with how society employs resources.
  • Asidas: Economics involves choices by individuals and societies under scarcity and surplus.

Key Concepts in Economics

Consumer

• Definition: Buys goods/services to satisfy wants.

Consumption

• Definition: Act of using goods/services by a consumer.

Producer

• Definition: Produces goods/services.

Production

• Definition: Act of producing goods/services.

Utility

• Definition: Capacity of a commodity to satisfy human wants.

Exchange

• Definition: Act of selling and buying goods/services.

Factors of Production

• Types: Land, labor, capital.

Factors of Income

• Sources: Rent, wage, interest, profit.

Investment

• Definition: Purchasing goods for future wealth creation (e.g., buying land).

Savings

• Definition: Excess of income over expenditure.

Micro vs. Macro Economics

• Micro: Study of individual units.
• Macro: Study of the economy as a whole.