Economics

Introduction to Economics

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 Agenda
Unlimited Wants and Limited Means

Scarcity and Choice

Micro economics vs Macro Economics

Concept of Demand

Concept of Supply

Equilibrium and Disequilibrium

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Unlimited Wants and Limited Means

Unlimited Wants Limited Means

Objectives
Resources
Goals

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Unlimited Wants and Limited Means
Unlimited Wants Limited Means

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 Agenda
Unlimited Wants and Limited Means

Scarcity and Choice

Micro economics vs Macro Economics

Concept of Demand

Concept of Supply

Equilibrium and Disequilibrium

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 Scarcity and Choice
Everything is Limited or Scarce

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The Problem of Choice

Production Possibility Curve or Transformation Curve

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 Agenda
Unlimited Wants and Limited Means

Scarcity and Choice

Micro economics vs Macro Economics

Concept of Demand

Concept of Supply

Equilibrium and Disequilibrium

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Micro Economics and Macro Economics

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Micro Economics and Macro Economics

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 Agenda
Unlimited Wants and Limited Means

Scarcity and Choice

Micro economics vs Macro Economics

Concept of Demand

Concept of Supply

Equilibrium and Disequilibrium

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 Concept of Demand

Effective Demand Absolute Demand

Need along with purchasing Need but purchasing Power is

Power is there not there

Example: A beggar desires milk, but has no purchasing power. Hence a beggar’s desire for milk
does not constitute an effective demand for milk. As a result a beggar cannot participate in
market activities. However, suppose this beggar becomes successful in getting a job, becomes a
helper in a shop and for his work as helper gets paid for in money. The beggar who is now a
helper earns an income, with which she can buy milk. The beggar’s demand for milk, which
earlier constituted only an absolute demand, has now become an effective demand

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 Concept of Demand

Hence, for demand (for a good like milk) to exist two conditions
Effective Demand must be fulfilled:

Need along with purchasing

Power is there

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 Demand and Price for a Good

Demand Schedule

Demand Function

Price is the cause and quantity demanded is the effect

Price is independent variable where as Quantity Demanded is dependent variable

Independent variables are also called exogenous variables while dependent variables are called endogenous variables

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 Demand and Price for a Good

Demand Curve

P’ A downward sloping demand curve reflects the law of demand.

This law says that, other things remaining the same, a consumer
(or, in general consumers) would tend to buy more when price
falls and buy less when price rises
P”

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 Demand and Price for a Good

Demand Curve

P’

P”

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 Demand and Price for a Good

Demand Curve

P’

P”

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 Agenda
Unlimited Wants and Limited Means

Scarcity and Choice

Micro economics vs Macro Economics

Concept of Demand

Concept of Supply

Equilibrium and Disequilibrium

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 Concept of Supply and Price of Goods

Supply Schedule

Supply Function

As price of good X rises the quantity supplied tends to increase. And when own price of good X decreases
the quantity supplied tends to decline

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Concept of Demand

Supply Curve

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 Equilibrium and Disequilibrium
This means that when quantity supplied balances (matches) the quantity demanded, the market for that commodity
reaches equilibrium

Markets are generally always in Disequilibrium

because there are lot factors always coming in
OP2
1. Elections
2. Inflation
OP*
3. War
4. Monsoon
OP1
5. Terrorism

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