Introduction to Economics Ms. Mangal Gogte

Basic Concepts Scarcity: People do not have as much of everything as they want Choice: Wants unlimited, means limited and have alternative uses Value: in-use & in-exchange Opportunity cost, Real cost & Money cost Positive ( What is: descriptive) Normative Economics ( What ought to be: value judgement )

Consumer & Producer (goods or services) Consumer’s Surplus & producers Surplus Circular flow of National Income Objectives: Utility (satisfaction level) & Profit Demand: inversly related to Price Q = f (P, Y, F, T, future trends….) Supply: directly related to Price Elasticity of Demand

Market - Price determination Factor and product market Economic Systems Perfect & Imperfect Market (Monopoly, duopoly, monopolistic competition…..)

Resources Efficiency Production Possibility Distribution – Rent, wages, interest & Profit Ricardo’s Rent theory – Marginal Land Marginal Productivity & wages Production Function: Q = f (a, b, c,………n, ¯ ) Long-run & Short-run T

Law of non-proportional output ( Law of variable proportions) - Increasing returns - Diminishing returns - Negative returns Laws of Reruns to scale- - Increasing returns - Constant returns - Diminishing returns Optimum firm and Equilibrium firm Objectives of the firm