ASSIGNMENT.

I. DEFINE THE FOLLOWING TERMS:

1.  ECONOMICS - can be defined in a few different ways. It's the study of scarcity, the study of
how people use resources and respond to incentives, or the study of decision-making

2. SCARCITY -  refers to a basic economic problem—the gap between limited resources and
theoretically limitless wants. This situation requires people to make decisions about how to
allocate resources efficiently, in order to satisfy basic needs and as many additional wants as
possible. Any resource that has a non-zero cost to consume is scarce to some degree, but what
matters in practice is relative scarcity. Scarcity is also referred to as "paucity."

3. RESOURCES - Resources are a kind of supply that can be drawn on by a person or

organisation in order to function and execute plans and projects. Resources can be in the form of
money, material, staff, energy, expertise, time and management, among other things.

4. GOODS - are items that satisfy human wants and provide utility, for example, to a consumer
making a purchase of a satisfying product.

5. CAPITAL - Capital is defined as “All those man-made goods which are used in further
production of wealth.” Thus, capital is a man-made resource of production. Machinery, tools and
equipment of all kinds, buildings, railways and all means of transport and communication, raw
materials, etc., are included in capital.

6. UTILITY - Utility is a term in economics that refers to the total satisfaction received from
consuming a good or service. Economic theories based on rational choice usually assume that
consumers will strive to maximize their utility.

7. NEEDS -  A need is something needed to survive while a want is something that people desire
to have, that they may, or may not, be able to obtain. The terms wants and needs are used in
today's economy, and not always accurately.

8. WANTS -  A wants is something that is desired. It is said that every person has unlimited wants,
but limited resources (economics is based on the assumption that only limited resources are
available to us).

9. LABOR - Labor is the effort that people contribute to the production of goods and services . 

10. LAND -  Land was considered to be the “original and inexhaustible gift of nature.” In modern
economics, it is broadly defined to include all that nature provides, including minerals, forest
products, and water and land resources.

11. TECHNOLOGY - The definition of technology is science or knowledge put into practical use to
solve problems or invent useful tools. ... Applying a systematic technique, method or approach to
solve a problem. Much of today's technology implies the use of computers.
 12. HEALTH ECONOMICS - Health economics is a branch of economics concerned with issues
related to efficiency, effectiveness, value and behavior in the production and consumption of
health and healthcare.

II. WHAT ARE THE DIVISIONS OF ECONOMICS?EXPLAIN EACH DIVISION.

 Consumption since the existence of human wants is the starting point of

economic activity, we study consumption first. In this, we study about the
consumption of wealth for the satisfaction of human wants.
 Production this division covers the factors of production viz., Land, Labor,
Capital and Organization. The laws governing production, mobility of
factors and the role of factors are studied in this division.
 Exchange in this division, we study about trade and commerce, money
and banking. Consumption will be possible only if the produced commodity
is placed in the hands of the consumer. For this, trade and commerce are
essential for the movement of goods and services from one place to
another.
 Distribution production is the result of the cooperation of factors of
production. Since a commodity is produced with the efforts of land, labor,
capital and organization, the produced wealth has to be distributed among
the cooperating factors. The reward for factors of production is studied in
this division under rent, wages, interest and profit. Distribution studies
about the pricing of factors of production.
  Public Finance this division studies about the income, expenditure and
financial administration of the State. This tells about taxation and
expenditure, budgeting and financial administration. Public Finance has
been separated from Economics and is treated as an independent branch.

III.  WHAT ARE THE TYPES OF ECONOMICS?EXPLAIN EACH TYPE.

 Traditional Economic System The traditional economic system is the most
traditional and ancient types of economies in the world. Vast portions of the world
still function under a traditional economic system. These areas tend to be rural,
second- or third-world, and closely tied to the land, usually through farming. In
general, in a traditional economic system, a surplus would be rare. Each member
of a traditional economy has a more specific and pronounced role, and these
societies tend to very close-knit and socially satisfied. However, they do lack
access to technology and advanced medicine.
 Command Economic System In a command economic system, a large part of the
economic system is controlled by a centralized power. For example, in the USSR
most decisions were made by the central government. This type of economy was
the core of the communist philosophy.In a command economy, it is theoretically
 possible for the government to create enough jobs and provide goods and
services at an affordable rate. However, in reality, most command economies
tend to focus on the most valuable resources like oil.
 Market Economic System In a free-market economy, firms and households act in
self-interest to determine how resources get allocated, what goods get produced
and who buys the goods. This is opposite to how a command economy works,
where the central government gets to keep the profits.In this type of economy,
there is a separation between the government and the market. This separation
prevents the government from becoming too powerful and keeps their interests
aligned with that of the markets.
 Mixed Economic System A mixed economy is a combination of different types of
economic systems. This economic system is a cross between a market economy
and command economy. In the most common types of mixed economies, the
market is more or less free of government ownership except for a few key areas
like transportation or sensitive industries like defense and railroad.
IV.  WHAT IS DEMAND? HOW ABOUT SUPPLY?
Demand is an economic principle referring to a consumer's desire to purchase goods
and services and willingness to pay a price for a specific good or service while the
supply is the amount of a resource that firms, producers, laborers, providers of financial
assets, or other economic agents are willing and able to provide to the marketplace or
to an individual..

V.  GIVE THE FOLLOWING FACTORS WHICH AFFECT THE SUPPLY AND THE
DEMAND. EXPLAIN BRIEFLY HOW EACH FACTOR AFFECT THE CONDITION OF
SUPPLY AND DEMAND.

Factors Affecting Supply:

Price: As above mentioned, there is positive relationship between price and quantity
supplied. It means, with increase in price, quantity supplied will be increased and vice-
versa. Supply of a good majorly depends upon its price.
Cost of Production: Cost of production means total cost incurred during the process of
production. There is negative relationship between cost of production and quantity
supplied. It means, if the cost of production is high, the quantity supplied will be less and
vice-versa.
Technology Advancement: It is referred as one of the important determinant of supply.
A better and advanced technology results less cost of production and captivate
producer to produce more supply more. For example, The printing of books, journals,
newspapers etc. increased many folds after the technological advancement of printing
press.
Factors affecting demand:
Price of good: Change in price of good affect its demand. Price is the most important
determinant of demand. A “demand curve” plots combinations of prices and quantity
demanded. A shift in price causes a shift along the demand curve
Price of other goods: Changes in the prices of other goods can increase or decrease
demand.
 Number of buyers: An increase in the number of potential buyers will increase the
demand for the good
Future Prices: An increase in the expected future price of a good increases current
demand. A decrease in the expected future price of a good decreases current demand.
For example, when a good is temporarily put on sale, people stock up on the good.
Taste: Demand curves can shift due to changes in tastes over time. For example
demand for coffee may be high in winter as compare to summer.
Quality: Demand curves can shift due to changes quality. At a given price, demand for
Giordano’s pizza is higher than the demand for Papa John’s.
Supply: Demand curves do not shift due to changes in supply. Shifts in supply change
the equilibrium price causing a shift along the demand curve. Shifts in supply cause a
change in the quantity demand not a shift in the demand curve.