SOCIOLOGY & BUILDING ECONOMICS

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 CONTENT

• Definition of economics;
• Definitions of terms: Goods;
Utility, Value, Price and
Wealth.
• The relationship of economics
with the built environment
and land use.

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 ECONOMICS

• The branch of knowledge concerned with the production, consumption, and

transfer of wealth
• Economics is a social science concerned with the production, distribution, and
consumption of goods and services. It studies how individuals, businesses,
governments, and nations make choices on allocating resources to satisfy their
wants and needs, trying to determine how these groups should organize and
coordinate efforts to achieve maximum output.
• Economics can generally be broken down into macro-economics, which
concentrates on the behavior of the aggregate economy, and microeconomics,
which focuses on individual consumers and businesses.

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 ECONOMICS

• The study of economics is generally broken down into two disciplines.

• Microeconomics focuses on how individual consumers and firm make decisions; these individuals can be a
single person, a household, a business/organization or a government agency. Analyzing certain aspects of
human behavior, microeconomics tries to explain how they respond to changes in price and why they demand
what they do at particular price levels. Microeconomics tries to explain how and why different goods are valued
differently, how individuals make financial decisions, and how individuals best trade, coordinate and cooperate
with one another. Microeconomics' topics range from the dynamics of supply and demand to the efficiency and
costs associated with producing goods and services; they also include how labor is divided and allocated,
uncertainty, risk, and strategic game theory.
• Macroeconomics studies an overall economy on both a national and international level. Its focus can include a
distinct geographical region, a country, a continent, or even the whole world. Topics studied include foreign
trade, government fiscal and monetary policy, unemployment rates, the level of inflation and interest rates, the
growth of total production output as reflected by changes in the Gross Domestic Product (GDP), and business
cycles that result in expansions, booms, recessions, and depressions.

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 ECONOMICS

Conclusion

Micro- and macroeconomics are entangled; as economists gain an understanding of certain

phenomena, they can help us make more informed decisions when allocating resources. Many
believe that microeconomics' foundations of individuals and firms acting in aggregate constitute
macroeconomic phenomena.
Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 GOODS

• A commodity, or a physical, tangible item that satisfies some

human want or need, or something that people find useful or
desirable and make an effort to acquire it.
• Goods that are scarce (are in limited supply in relation to demand)
are called economic goods, whereas those whose supply is
unlimited and that require neither payment nor effort to acquire,
(such as air) are called free goods.
• An economic good is a good or service that has a benefit (utility)
to society. Also, economic goods have a degree of scarcity and
therefore an opportunity cost.
• This is in contrast to a free good (like air, sea water) where there is
no opportunity cost – but abundance. Free goods cannot be
traded because nobody living by the sea would buy seawater –
there is no point.
• However, with economic goods where there is some scarcity and
value, people will be willing to pay for them (in some form).

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 GOODS

• Another feature of an economic good is that if

it can have a value placed on the good, it can
be traded in the marketplace and valued using
a form of money.
• An economic good will have some degree of
scarcity in relation to demand. It is the scarcity
that creates a value people become willing to
pay for. It is the scarcity which creates
opportunity cost.
• For example, if we pick apples from a tree, it
means that other people will not be able to
enjoy them. If we devote resources to mining
gold, the opportunity cost is that we can’t
devote this time and effort to growing corn

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 UTILITY

• Utility is a term in economics that refers to the total satisfaction received from consuming a good or
service.
• The economic utility of a good or service is important to understand, because it directly influences
the demand, and therefore price, of that good or service. In practice, a consumer's utility is
impossible to measure and quantify.
• However, some economists believe that they can indirectly estimate what is the utility for an
economic good or service by employing various models.
• The utility definition in economics is derived from the concept of usefulness. An economic good
yields utility to the extent to which it's useful for satisfying a consumer’s want or need.

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 VALUE

• Value is what goods or services pay you

• Economic value is a measure of the benefit provided by a good or service to an economic
agent. It is generally measured relative to units of currency.
• Economic value is not the same as market price, nor is economic value the same thing as
market value. If a consumer is willing to buy a good, it implies that the customer places a
higher value on the good than the market price
• Value can never be calculated in numbers. Value varies from customer to customer
• value is the usefulness of any product to a customer; in other words, the value is what your
customer believes the product or service is worth to them.

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 PRICE

• Price, the amount of money that has to be paid to acquire a given product. As the amount – the people are
prepared to pay for a product represents its value, price is also a measure of value
• It follows from the definition just stated that prices perform an economic function of major significance.
• prices provide an economic mechanism by which goods and services are distributed among the large number of
people desiring them.
• They also act as indicators of the strength of demand for different products and enable producers to respond
accordingly.
• Price is the monetary value of a good, service or resource established during a transaction. Price can be set by a
seller or producer when they possess monopoly power, and are said to be price makers, or set through the
market itself, when firms are price takers. Price can also be set by the buyer when they posses some monopoly
power.
• Function of prices may be analysed into three separate functions. First, prices determine what goods are to be
produced and in what quantities; second, they determine how the goods are to be produced; and third, they
determine who will get the goods.

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 WEALTH

• Wealth measures the value of all the assets of worth owned by a person, community, company or
country.
• Wealth is determined by taking the total market value of all physical and intangible assets owned,
then subtracting all debts.
• Essentially, wealth is the accumulation of resources. Specific people, organizations and nations are
said to be wealthy when they are able to accumulate many valuable resources or goods.
• Wealth is expressed in a variety of ways. For individuals, net worth is the most common expression
of wealth, while countries measure by gross domestic product (GDP), or GDP per capita.
• Money is the most common means of measuring wealth.
• The value of a product or material used as the basis for a monetary system depends on how much
others are willing to trade or provide labor in exchange for it.
• Another factor is the degree of universal acceptance the material or commodity has.
• If no one outside a community is willing to accept the money in exchange for goods or services, it
has no value outside of the society that uses it.
Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
 The relationship of economics with the built environment and land
use.
1) Conversion of farmland and forests to urban development reduces the amount of land available for food and
timber production
2) Soil erosion, salinization, desertification, and other soil degradations associated with agricultural production and
deforestation reduce land quality and agricultural productivity
3) Conversions of farmland and forests to urban development reduce the amount of open space and environmental
amenities for local residents
4) Urban development reduces the “critical mass” of farmland necessary for the economic survival of local
agricultural economies
5) Urban development patterns not only affect the lives of individuals, but also the ways in which society is
organized.
6) Urban development has encroached upon some rural communities to such an extent that the community’s
identify has been lost
7) Excessive land use control, however, may hinder the function of market forces
8) Land use regulations that aim at curbing land development will raise housing prices, making housing less
affordable to middle– and low–income house-holds

Ar. Sri Lakshmi V

© 2020, Nitte School of Architecture, Planning & Design, Bengaluru. All rights reserved to NITTE SAPD.
P B No. 6404, Govindapura, Gollahalli
Off International Airport Road NH-7, Yelahanka
Bengaluru - 560 064, Karnataka, India.

T : +91 80 2216 7900 / 903 / 904

F : +91 80 2216 7902
M : +91 99722 41144

E : nittesoa@nitte.edu.in
director_nittesoa@nitte.edu.in
W : www.nittesoa.ac.in