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    35 views17 pages

    Eco CHP 1 5 Summary 1670726285642

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    Fa a aS Stee Ree age Rete Ns cee ela CA Foundation Business Economics Economics Chapter 1 & 5 MARATHON by MVSIR CA Mohn sh Vora (MVSIR O Faculty for CA Foundation- Business Economics & BCK CA Intermediate- Financial Management & Economics Known for making concepts easy and amazing notes Q Amongst the TOP educators on Unacademy Q 3+ years of Teaching Experience Q 10th & 12th Merit Student (CBSE) Q National Level Roller Hockey Player * Study Economics & BCK with CA Mohnish Vora (MVSIR) wy Follow on Unacademy App- www.unacademy.com/@camohnishvora a Also join community tab for updates ef One link of all lectures details of MVSIR- bit.ly/mvsirunacademy Use code “MVSIR” for max discounts on Unacademy app Unacademy Classes ond ‘Subscription Classes Paid Classes on Unacademy App by India’s Top Educators Iconic Subscription > Unlimited access to all course and educators of respective course PetCo m aCe RCE tts Use code "MVSIR™ for mex discounts ‘on Unacademy App SOB NRT eye CL AN Bo AUB Tee | COW ne Send Ory a ears Cerone ——————— eS eoesee eer PE a ee ei Ce Us Cee casy Te eer Chp 1: Intro to Business Economics > Basics of Business Economics > Basic Problems of an Economy 19 to 12| marks Chp 2: Theory of Demand and Su > Theory of Demand > Supply > Consumer Behaviour Chapters - Dec 2022 Chp 4: Price Determination in Different Markets > Various forms of markets 15 to 18] > Price determination in these markets. marks | > Price-Output determination under different Market Forms Chp 5: Business Cycles > Meaning, > Phases, > Features, le ge, 2] > Couses eee Chp 3: Theory of Production and Cost > Meaning and Factors of production > Laws of Production > Concepts of Costs le to 24] Conbined weightage of hp 2 & 3 Vera " for getting max discounts on Unacademy Subscription kk CA Foundation - Dec 2022 Business Economics Chapter 1 “wo fundametal fact of Economies "Unlimited Wants F Reseurces are relatively scarce rescues (Presom of Scoriy)and hve alternative uses We comot have everything we wart with resources wnehove,weare forever forced Ye make holes. Therefore, we choose to stity oly seme of cur rons leaving many other want nso fea Problem of scot ie faced by EVERYONE inthis wrod Thus Coram ic Economie’ is derved from Gresk word “Oioramie, “Ete meaning. ie "howeehld manonenent| RAN = ae Decsn making refers to prea of 78 Feros Selene ch de wh wean ” cg OM appreprice erative ee 3 ‘hori prowae te ‘Aires Marsal [Wotors DST seal eee i mon rfc naan of stain @ Sareea eases > from io ore aernative custs eration __|Esenomice snetal between ends. a a Sonia Levon befatan ‘fen erganaaions scarce resources. ‘Buinst Economie nay be defined or the use of ecaponipanayss to make business cession moh the Ber se “Toe! Deon defined “Business Economic” at ue if edardmic nay in farmultion of busines plies Business Economies is he. Aplied Economies or Managerial Ezoramies ‘Study of behaviour of individ (on ghup of nite father than al the ts combined ‘Eeenamies s The sudy of the processes by which ‘latively scorce resources are alcated to Satisfy competing unmsted wants of aman begs Til 9th entry, Economics was know at Politica Economy ether of Economics - Adam Smith, He wrote 2 Seok An nqury no the Neture end Cowes ofthe {| Wealth of Nations (W776) Tr examines how indviutbapits make decisions 0s to how ocfficiertyalocle Wher saree resaurces ‘Study of economy of 0 whole. Tr ondhzes the overall ‘Aa = Agresote Eeonemies Few areas uider Meg Boies oe () Product ping: (i) Contes beh (i) Foctr pars (i) The ecaramconiins ofa Section of people: (0) Behaviour frms ond (oD ear of inrry Few areas under Macro: Economies ae {National Income ad Neto Outpt {i eneral price level nd terest rates: (i) Blnce of trade and bance of payment {ho External au of eurreny (0) The vere ee of sovingy ord ivestment: and (The level of employment ond rate of economic growth Sisfianae Ea 1) Busnes Economic i Science 2) Based on Mier Economies 8) Theerperotes cements of Maer Analysis 4) Business Economic igen ert 5) Use of Theery of Markers ond Priate Enterprises 6) Pragmatic in Approach 7) Tmerdscpnary nature 8) Normative in Netare +" pastive Eeanomies ~ Descriptive, “What i + Nermetive Economies - Prescriptive, "What Shell be” dere for welfore, mvees Yelue Jdgements z nm Ear Trery econanic sytem Fad Yo deal with central problem of scarcity of resources relative v0 the wots for them ‘his ental ala the cetrel economic problen 1) What to prodce? 2) How to prosce? 5) Farwhom to prodice? 3) What provsiens ore tobe mode for economic growth? iy Cepek 2 Soa - spuies "Al resources ore oud ond aregledby private indvduls for profit Maren! recourse ore cared by ‘Store (va Gove or Central Poming Aston) 1 depends on both markets nd Severnmans for dloationofresures Scone Busnes Economics ‘hat eise whim organisation and ee within ontal of manogenant” In business economies ‘ne oply mereecoromic theery Yo these sues > ore rt within the comrl of maregenent. In business ‘earomes we apply macroeconomic heary 10 Shece eer ‘Ata fee market economy or essez-faie econ) Characteristics Perit motive i ing foes, 5 Right prvste property > Frendom cf enterprise &econmie chee (onsuner sovereignty) > Absence of Govertment Interference > Conpertion(eFitency neeasegepuinum location, cost minimized: Sut mestogeof resources ae fe atartsemeat) Mente > Coraumers are benefitted mary geod qty geod ot lm prices 2 Selfregting ond. Restrces altered “outonaticly by price recon > Fonction ina dere framenark > Encourages entre and ik ling Denarits > ast afl iequlty and soil ijstce, spits society inte haves Prevents rh > Bpiavetionf labour &cersamers > Resource misallocation = production of mere hur geeds 5 Corspcicus unethical corsunption = eircomertal derodstion. " for getting max discounts on Unacademy Subscription Hao contalst economies soe central pecblenat 1): What te produce? Gecided’ by consumers who. show preferences by Spending on goede which Shey wort 2) How to proce? 1 labour is relatively cheap thon capt Shon usu labownivoneve method & vce 43) For whom to produce? Higher the Income, higher buying capacity fd higher ‘domand for goede, boods produced for people having byingeapeity 4) Provision (eving & Int) Trterest Rate on saving high: move soving More profit expectetion move invest ‘Aa Command Economy or Controlled Economy or Central Plnned Economy Concept given by Karl Mare and Frederic Engels in"The Communist Manfess (1848) Proditan by Govt aimed t maximizing welfore of puble ercteites P Galectve Onership 5 Ezaremi pam 5 sence of Consumer Coice > tively Eo cone Distribution 5 Minima rele of Price Mechonam or Market forces - Prices prevailing here ore ‘administered pies which ere st by Got > Absence of Competition Seta plowing of resrens:epddevlopmen, better latin west weed 5 Unemplayment i minimises, 5 Buenas fcrustare ae shminated 5 Right Yo wortand morn standard of ving 5 Uabaurers and consumers are protected from exlitatin > Ganorchensine soil acuity > Barcauracy & red topsm ieficeny end delays, corpo, feverish 2 Takes away the Base rights right 0 property| > does at provide necessary incon wes te hard work > Gonaumers hove ro freedom of che 2 Ertreme farm of sacicom nt tal proctieabe(Soiliecoomy =< myth) How de zit economies cue central problems ~ Central ling Authrity Trincies the best features ofboth copitalim & recilisn Private enterprise is cllmed toda any type of economic activity. However, ‘he Gort imposes measures to genta nd Peglte prvae sector The Government itself fing mpertont ond selected industries en eliminate ‘the fre ply of profi weve and self-test pai 2 pace 3 ages, Denasite Eacestve controle by the stote resting in reduced incentives end Eontrned grmth of the private sector tear mplensrerion ef pomng 4 Higher rates of toxtion % Unive dees, Lackef eficeny, Corrption, Wastage of resources > Poor perform of the public Sector ine economia ao . {hases emt of beth price mechanam and central planing " for getting max discounts on Unacademy Subscription To avail maximum discounts & offers ie a Use code * kk CA Foundation - Dec 2022 Business Economics Chapter’ 5 oo * > The chyhnie fluctuations in aggregate econamic activity that en economy experiences ovr a period of Time are coled bus ‘ices or rade ecles > A trode cytes conpate of Fete of ed trade charcterized by rising prices and low (Genpieyaert percents expense) > Periods of bad trade chractried by fling prices ond igh Unemployment percertges (Cortracten. > Business cyles is that they occur gain open but not eways at ruler intervals nor ae they of sme legth Expansion stage eroleyment petble Carties 1 ‘here is fa of emrees & proaicton aleztivly cles “eri ate of “ronth ate in expansion stage evertaly Hows down end reaches peak eSk= tp or highest pet of business cyl rn later stoges of expansion, inputs ore sfidt to find ot they are shart of their donand end therefore input prices crease. Outpt prices also rise reply leading to increased cost of living and greater strain en fixed income careers Consers. segn to nevi thle consumption expendture on asin, drabe gonds ete. Achel demand Hognates: 1s end of expansion and it sccur whan economic growth hes reached pont where t vil sable ard then move n reverse direction, storing cortrachonstoge Economics Chapter 5 - Business Cycles Producers de not instantaneously recognize pulse of economy (hat cantroction Is caning) 4 keep anticipating high level of demand (becuse rer exparson was gong on) ond mela thle neste Consequences mismatch between demand & supply. Supply far exceeds ‘denond adil sproace tol actors Producers now bing arare of above respond by lrg ok fue ester plans, > caneltin of orders for equlpments an ll inputs incl aber ‘This in tun generates chain of reactions in np mort end of capitel goods end row matericls in tun respond by canceling ed ‘artaning their orders This Boing of recesnen Decline of gregote economic activity over @ pared of time ie RECESSION when eortacton stage lste fer 2 or more quires Ceninousy, then i ello recession) Decreare in np? demand Treeson corfdenee at owes Severe contrection in ecraicetitiespahes economy inte phase of depresin, > Growth rate becomes negative and ational igme ond expenditure decies repay > fag, demand decreases, prices arp lowest forcing same fm to shutdown Tt lad ‘Sartng namployment wich apes consumers withvery lise come: > A typed feature of preston isthe fall nthe interest rate, With low interest, eaple's demand for held iuld money (ce cosh) erases, > Despite lover inten? Yass, demand for credit declines because investors’ cunfidence has fan Erity led opossble barking e financier > Irdueries, especialy. ciptal and consumer rable gonde industry, afer from ices capacity Largs number of bakoupcies ond gidation i RY The ini carte Ye contract eres. Trough lsts for sone tine & marks and being of opin. Thi reverses process. lobar markst. Pervasive unemployment forces Prodicers lower their prices Tedapose off imentores tout fture and Investments pr and emp fgther decline = “ogregste donand Faroe Fal ‘ep between dencod Wauppy gets "thor widened and vetestion Consmars_ expect farther ‘decearesnpices and postpone then purchases a eee ERO ee oN ee ea prodicere anticipate lover costs end better busines: environment, Slowly business ull nut pres ow Earocpies fal of reversal i intially felt = te cecep lower wages Decrease im enploymer® Bank cre decrease Leads fo decrocte income [Busnes Fras Become penning), confloence fles off firms stort to Invest ogoin ond to bul stocks Techosogcal advancements require fresh investments: thas bank credit increases. ‘enploment Incr, 9g, emer picks up and pics graduly rise. Price mechaniem act asl corecting process in free market economy ‘Spring of ivestent ceuses recovery of economy. This acts as @ tuning pint Frem preston to opens, : EE : cae, 1 is very difficult to predct the turing points of business els | |[o) Susnear cycler occin pevedcaly, tutmd not exhibit the sane repilarity, The EEe MGR cre ene eaters | | Som cleaanya ema en crgmang tarot ore Th comm Peed tert The re |) Tops (ty seating So rrr en rose —— ee eer eee eee 1) 0 ciel ged 6 artis Abend pod! nacwrel we, agrpatinctey ford) eae het es bt i) seen stots fot o| || ead Eat erie we cop wap ee ‘ eget ea [2129 Rome QO torn otto came CE eI oy cee Se re OCR Se ree Legging indeatrs reflect economy's historia performance and changes in these indicators re abservabe ony after on economic trend hs lea cored 1h) Have sereupeanstovenceson well-being f see. Tf leading inlcters gal the onset of busines eyces, lagging Instore ‘infirm these tends 5. unemployment, corporate profits, labour cost per unit of output, interest rete, the conser ole inde and comercial lending act ‘Cotcdertl / Concurrent Indicators . They going ex occur simitaneusly wth busimess

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