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Economics

What is economics?
Study of wealth management

Economics is management of

What is economics?
Management of
land,labour,capital,organisation

Why we study economics??

Study of economics helps to solve


scarcity

Definitions
Adam smith
Adam Smith (1776) defines the subject as

"an inquiry into the nature and causes of the


wealth of nations

Welfare definition- Marshall-1890


Economics is a study of men as they think
and move and life in the ordinary business of
life. It examines that part of individual &
social action which is most closely connected
with the attainment & with the use of
material requisites of well-being"

Micro economics- meaning


It is a part of economics subject.
It study about individual economic behaviour
It study about individual firms economic
behaviour

Definition of 'Microeconomics'

The branch of economics that analyzes the


market behavior of individual consumers and
firms in an attempt to understand the
decision-making process of firms and
households.

Micro economics major topics

These are commodities

Macro economics
What is the definition of macroeconomics?
A: Definitions of Macroeconomics.
"Macroeconomics is that part of economics
which studies the overall averages and
aggregates of the system. (Kenneth Boulding)

Macro economics
Definition
"Macroeconomics deals with the functioning
of the economy as a whole.

Utility
It refers to satisfaction or use of a
commodity

Utility
Utility decides the demand as well as price

Utility meaning
Utility, or usefulness, is the ability of
something to satisfy needs or wants. Utility is
an important concept in Economics and game
theory, because it represents satisfaction
experienced by the consumer of a good.

Total utility
It refers to sum of utility of consumption of
many units
Apple1
Apple2
Apple---3

Total utility

Total utility is the aggregate sum of


satisfaction or benefit that an individual gains
from consuming a given amount of goods or
services in an economy. The amount of a
person's total utility corresponds to the
person's level of consumption.

Marginal utility
Marginal utility is an important economic
concept because economists use it to
determine how much of an item a consumer
will buy. Positive marginal utility is when the
consumption of an additional item increases
the total utility.

how to calculate utility??


Two methods
Cardinal method--The term
'cardinal utility' was first used by Hicks and
Allen----

Cardinal utility
Cardinal utility is a view of utility
measurement based on the presumption that
the satisfaction of wants and needs is a
quantifiable characteristic of human activity.
In other words, utility can be measured with
numerical values (1, 2, 3, etc.) along a scale.

Ordinal utility
Ordinal utility is a view of utility
measurement based on the presumption that
the satisfaction of wants and needs is not a
quantifiable characteristic of human activity
and that preferences are subjective.
Preferences among goods can be ranked (first,
second, third, etc.) but not measured
according to a scale.

Law of diminishing Utility


law of diminishing marginal utility

Definition
A psychological generalization that the perceived value
of, or satisfaction gained from, a good to a consumer
declines with each additional unit acquired or
consumed.

Utility

TABLE

Total & Marginal Utility.

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