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YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 Capsule 1 Economics Economics is an economic analysis people aim at maximizing their satisfaction from their scarce resources. Thus, the field of economics constitutes wants, efforts and satisfaction. Father of economics - Adam Smith A famous book “ wealth of nation “ is written by – Adam Smith Father of modern economics – J.M.Keynes Father of microeconomics – Adam Smith Father of macroeconomics – J.M. Keynes Economics is a Greek word “OIKONOMICAS” with “OIKOS” means a household and “NOMOS” meaning management. Definitions of Economics Wealth – Adam Smith Scarcity – Lionel Robbins Welfare – Alferd Marshall Growth – Samuelson & J.M. Keynes Division of economics Traditional approach – in this approach 4 division are included 1. Production :- it is an activity that helps to create utility. In the production process, inputs or resources are transformed into products. 2. Consumption :- it represent using up of utilities. 3. Exchange :- exchange of goods take place among group of individuals, country, markets etc. 4. Distribution :- it refers to the sharing of wealth produced by the community among the agents of production. Contact No. 9829990411

YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 Modern approach – in this approach we will study microeconomics and macroeconomics. 1. Microeconomics :- it deals with economic behaviour of individual economic unit. It is also known as price theory. It covers the theory of consumer behaviour, theory of factor pricing 2. Macroeconomics :- it treats the economic system as a whole. It is also known as income theory. It covers, the theory of income and employment, theory of economic growth, policy formulation and analysis, etc. National income is also include in macroeconomics. Term microeconomics and macroeconomics is given by – Ragnar Frisch Methods of Economic Investigation – two method 1. Deductive method :- J.S. Mill and Bacon advocated this method. This method is called analytical or abstract or apriori method. Here the economists proceed from general to particular. Through this method theoretical abstractions are derived from the real world. 2. Inductive method :- Roscher and Frederick advocated this method. This method is also known as historical or empirical or posterior method. In this method facts are generated through surveys. Here the investigator moves from particular to general. Contact No. 9829990411

YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 Basic concept of economics Goods :- anything that satisfies a human want is called good. Goods are tangible and material outcome of production. Example – food grain, pulses, machinery, implements, seed, cloth, book etc. Service :- a service is any act or performance that one party can offer to another. Service are intangible and non-material. Example- doctors, teachers, laborer’s etc. Classification of goods A. Based on supply Economic goods Purchased at given price Supply less than demand Value in use and value in exchange Ex.- machinery, building, furniture etc Free goods Free gift of nature Supply more than demand Value in use but no value in exchange Ex.- air, sunshine, rainfall etc. B. Based on consumption Consumer goods :- those goods from which consumer directly derive the satisfaction using the goods. Goods of first order Ex.- food item, cosmetics, clothes, books, pens etc. Producer goods :- those goods that help to produce other goods is called producer goods. Goods of second order Ex.- machines, factory building, raw material etc. Contact No. 9829990411

YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 The chance of a producer good to become a consumer good is possible based on its usage. For example – electricity when used at home, it becomes a consumer good and the same becomes a producer good when used in industry. C. Based on Durability Mono period good :- those goods which are used only once to satisfy a need are called mono period goods. Ex.- food item, seed, fertilizer etc. Poly period goods (durable good) :- these goods can be made use of several times. Ex. Machinery, implements, building etc. D. Based on transferability Utility :- it is the capacity of a good that can satisfy a human want. Utility is subjective Utility varies with purpose, time and ownership Types of utility :1. Form utility :- by changing the form of a good, greater utility is created. Example – paddy into rice, whear into flour, cotton into cloth, butter into ghee etc. 2. Place utility :- transportation adds place utility Example – apple transfer from HP to RAJ. 3. Time utility :- Storage helps to create time utility 4. Possession utility :- transfer of ownership of the commodity Ex.- buying and selling of a commodity helps to create possession utility Value :- it is the rate of exchangeability Price :- when the value of a good is expressed in terms of money, is called price. Wealth :- anything, which has value is wealth. Contact No. 9829990411

YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 Capsule 2 Human wants A wish for a goods and service Origin of wants from the basic need of humans Characteristics of human wants :1. Wants are unlimited 2. Wants are complimentary (ex.- tractor and driver, pen and paper etc.) 3. Wants recur (ex.- hunger, recreation etc.) 4. A given want is satiable 5. Wants are competitive 6. Wants have alternative means Classification of wants 1. Necessaries :- the goods which are used to satisfy basic needs of humans are called necessaries. a. Necessaries of existence :- essential for living. Ex.- food, water, clothes, shelter etc. b. Necessaries of efficiency :- not essential but it improving the efficiency of an individual. Ex.- nutritious diet, table and chair to a student, class room with good ventilation etc. c. Conventional necessaries :- these are the necessaries, which arise out of customs or habits. Ex.- customs like celebration of function and habits like smoking, drinking, gambling etc. 2. Comforts :- these falls between necessaries and luxuries. Ex.cushion chairs in a classroom, fans in house, revolving chair in the saloons etc. 3. Luxuries :- satisfy superfluous wants of individual. Luxuries represent wasteful expenditure of the individuals. Contact No. 9829990411

YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 a. Harmless luxuries :- those, the expenditure on which will not cause any harm to the individuals. Ex.- well furnished bungalow, expensive food habits etc. b. Harmful luxuries :- injurious to the health of the users. Ex.alcohol, smoking etc. c. Defence luxuries :- those, which protect the users during the period of crisis. Ex.- expenditure on gold ornaments, jewelry etc. Theory of consumer behaviour : - two technique are used in the analysis of consumer’s behaviour- 1. Utility analysis or Marshallian approach or cardinal approach 2. Indifference curve technique or ordinal approach Cardinal approach - It can be measured - given by- marshall - study of one or more than one commodity - it include- law of diminishing marginal utility, law of equimarginal utility and consumer surplus Ordinal approach - It can not be measured - given by Allen and Hicks - study of two or more than two commodity - it include- indifference curve Law of diminishing marginal utility :- this law was initially formulated by H.H. Gossen so this law was also called Gossen’s first law. The law says that more a commodity that an individual possesses, the less is the utility that is derived from it. More emphatically, the law is based on the observation that each successive unit of a commodity brings in lesser and lesser utility until the point of satisfaction is reached. After the point of satisfaction is reached, any further consumption results in disutility or negative satisfaction. Contact No. 9829990411

YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 Assumptions of the law 1. Homogeneity of the commodity :- identical in size, colour, taste, freshness, maturity etc. 2. Continuous consumption of commodity :- no gap during consumption process. Explanation of the law:- before explain the law two concepts are need to understood viz:Marginal utility:- it is the additional utility derived by an individual, by the consumption of one more unit of the commodity. Total utility:- it is the sum amount of satisfaction derived from the consumption of different units of the commodity. Number of apples 0 1 2 3 4 5 6 7 8 Total utility 0 20 36 48 56 60 60 56 50 Marginal utility 20 16 12 8 4 0 -4 -6 Contact No. 9829990411

YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 Fig. diminishing marginal utility The relationship between marginal utility and total utility is that as the marginal utility is falling, total utility is increasing at decreasing rate. When marginal utility is zero than total utility is maximum, and finally the negative marginal utility results in declining total utility. Exception to the law :- this law does not apply for those persons with abnormal qualities i.e., drinking, gambling habits, miser etc. similarly, this law does not apply for persons who enjoy their hobbies. Law of equi-marginal utility:- this law is also known as Law of substitution Law of max. satisfaction Gossen’s second law Contact No. 9829990411

YouTube : Apex agri hub Classes for : JET, ICAR, BHU, Pre- PG, IBPS-SO, AAO Apex Institute of Agriculture Kamla Tower, Near Medical Center, Kalwar Road, Jhotwara, Jaipur , Raj.-302012 The law implies that if a person has a thing which he can put to several uses, he will distribute it between those uses in such a way that it has the same marginal utility in all. In this law consumers income (resources) is limited. In this process the consumer substitutes the goods having greater utility for those which have lesser utility. This process is continued till the marginal utilities of the commodities purchased are equalized. Hence the name, the law of equi-marginal utility. Assumptions :1. Consumer behaves rationally. 2. He has full knowledge about the commodities, their attributes, prices etc. in the market. 3. Commodities that are choosen divisible and substitutable. Consumer surplus : it is first introduced by Alferd Marshall it measured in monetary terms definition:- consumer surplus is the difference between what the consumer is willing to pay and what he actually pays. Fig. consumer surplus Contact No. 9829990411