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ECONOMICS FOR BUSINESS : 

ECONOMICS FOR BUSINESS Thursday, December 02, 2010 1 NVK

What is the objective of this course? : 

What is the objective of this course? The objective of this course is to acquaint the participants with concepts and techniques used in Economics and to enable them to apply this knowledge in business decision-making To build basic Economic common sense in the students to manage their resources ( physical, mental, spiritual, material and financial ) to maximize their wellbeing, happiness, and satisfaction. Thursday, December 02, 2010 NVK 2

Why study Economics : 

Why study Economics To make money To get insight into human nature To develop your life To enable you to choose a career To use your limited resources to your best satisfaction and advantage Thursday, December 02, 2010 NVK 3

Why study Economics : 

Why study Economics To initiate a revolution like Karl Marx To buy low and sell high To speculate in shares and securities To bargain in D-market To make the earth a better place to live & other infinite reasons Thursday, December 02, 2010 NVK 4

What is Economics? : 

What is Economics? Urges ,needs, wants, and demands are unlimited,unsatisfiable permanently. When one extinguished the next few ignited Means to satisfaction are scarce- limited Basic needs are provided by nature-They are gathered and used.gathered value added and used.they are satisfiers Thursday, December 02, 2010 NVK 5

Basic human nature.Urge-needs-wants-&demand : 

Basic human nature.Urge-needs-wants-&demand Urge, hunger, thirst, desire, cravings-biological in nature A human need is a state of deprivation of some basic satisfaction. People need food, clothing, shelter, safety, belonging and esteem. Wants are desires for specific satisfiers of needs Demands are wants for specific products that are backed by an ability and willingness to buy them Thursday, December 02, 2010 NVK 6

What is Economics? : 

What is Economics? Economics tries to get the best combination of satisfaction with the limited satisfiers available The efficient utilization of scarce economic goods is the essence of Economics. Thursday, December 02, 2010 NVK 7

Economics -Definitions : 

Economics -Definitions Political economy, or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the use of the material requisite of wellbeing –Alfed Marshall-Principles Of Economics. Economics is the study of how societies use scares resources to produce valuable commodities and distribute them among different people- Paul. A. Samuelson Thursday, December 02, 2010 NVK 8

Economics in brief : 

Economics in brief Twin themes of economics . SCARCITY&EFFICIENCY. Economics is a science which studies human behavior as a relationship between ENDS and SCARRCE MEANS which has alternative uses. Thursday, December 02, 2010 NVK 9

Economics- Key Focus Areas : 

Economics- Key Focus Areas Analyses how institutions and technology affect prices and allocation of resources among different users Explore behaviour of financial markets, interest rates and stock prices Examine distribution of income and how it can be made more just Studies the business cycle and examines how monetary policy can be used to moderate the swings in unemployment and inflation Thursday, December 02, 2010 NVK 10

Economics- Key Focus Areas : 

Economics- Key Focus Areas Studies international trade and impact of trade barriers Looks at growth in developing countries and proposes ways to encourage efficient use of resources Asks how government policies can be used to pursue important goals such as rapid economic growth ,efficient use of resources, full employment, price stability, and a fair distribution of income Thursday, December 02, 2010 NVK 11

Positive Economics : 

Positive Economics An analysis limited to statements that are verifiable i.e. based on facts Examples are the impact of computers on productivity, why do doctors earn more than sweepers etc These questions can be resolved using facts Thursday, December 02, 2010 NVK 12

Normative Economics : 

Normative Economics It involves ethical precepts and norms of fairness Examples should poor people required to work if they are to get government assistance There are no right or wrong answers to these questions because they involve ethics and values rather than facts Thursday, December 02, 2010 NVK 13

Three Fundamental Questions : 

Three Fundamental Questions What to produce? How to produce? And For Whom to produce? Thursday, December 02, 2010 NVK 14

Meaning of Efficiency, Equity, & Growth : 

Meaning of Efficiency, Equity, & Growth Thursday, December 02, 2010 NVK 15

Efficiency : 

Efficiency Efficiency means that the economy’s resources are being used as effectively as possible to satisfy people’s needs and desires.This leads to Productive Efficiency. Productive efficiency means that the economy cannot produce more of one good without producing less of another good. Productive efficiency means that the economy is on its production possibility frontier.The economy has to make a “ trade off “ or sacrifice of one good for another.Q ? What is PPF? What is trade off ? Thursday, December 02, 2010 NVK 16

Equity : 

Equity Equity means fairness and justice to all Markets need not produce fair distribution of income Inequality in income and consumption will lead to serious consequences. Thursday, December 02, 2010 NVK 17

Growth : 

Growth Growth means producing and consuming more of goods and services year after year. It also should be without the alternate bouts of inflation, unemployment, recession, depression and boom . Thursday, December 02, 2010 NVK 18

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