Basic Economic Problem

Economic Problems (General)

• Unemployment
• Poverty (Low Income)
• Inequality
• Inflation
• Black Money (Economy)
• Illiteracy
 Economic Problems
• The problem of allocation of resources:
What to produce?
• The problem of Distribution of goods and
services.
For whom to produce?
• The problem of Choice of techniques.
How to produce?
 Economic Problems...
• The problem of location of production:
Where to produce?
• The problem of efficiency of resources.
How efficient is the resources?
• The problem of Growth of the economy.
At what rate the economy is growing?
How to distribute the benefits of growth
with equal opportunities for all.
 The economic system

• Capitalist Economy
• Socialist Economy
• The mixed Economic system
The political system and the economy
• Democracy
• Communism
• Monarchism
• Theology
• Fascism
• Dictatorship
Micro Economic Principles
 Economics Principles
• Rationality: Economics agents maximises
their satisfaction.
• Consumers maximises their satisfaction.
• Suppliers maximises profits.
 Economics Principles
• Economics teaches us to think at margin.
• It promotes marginal concept to take
accurate decisions.
• Marginal Concept includes
Marginal Utility
Marginal Product
Marginal Cost and
Marginal Revenue
 Economics Principles
• The opportunity cost evaluates the actual
cost of any economic activities.
• Includes the economic activities that are
forgone to consider the use of a particular
factor of production or resources.
 Economics Principles
• The paradox of savings at micro level.
• If all people will save than the overall
consumption will fall. This will reduce the
demand in the economy, thereby reducing
the production and employment which will
reduce the income of the people.
• Therefore if eveyone increases their
savings the income in the economy will
fall.
 Economics Principles
• The existence of backward bending supply
curve is a worry to the firms.
• This is considered as exception to the law
of supply.
• Increasing wages may increase the
tendency among workers to often take
leisure time rather than to work.