A) Economics as a science.
According to economics, regarding the nature of economics, whether the subject economics is considered as science or an art.
If it is a science, then either positive science or normative science.
There are following characteristics of any science subjects such as:
- Laws are based on experiments and are universally accepted.
- It develops correlation between cause and effect.
- It is based on systematic study of knowledge on facts.
- It makes future predictions.
- It has a scale of measurement.
- Economics is also based on experiments and also universally accepted like law of demand, law of supply, law of diminishing marginal utility, etc.
- Economics deals with the correlation-ship between cause and effect. Example:Change in price is cost per change in demand/Supply is effective
- Economics is also a systematic study of knowledge and facts. All the theories are facts related with both micro and macro economics and systematically collected and analyzed.
Ques : What is the economy?What do you mean by the central problem of the economy?
Ans : An economy is an area of the production, distribution and trade, as well as consumption of goods and services. Generally, it is defined as our social domain that emphasizes the practice, discourages and material expressions associated with the production, use and management of scarce resources.
Given economy is a set of processes that involves its culture, valves, education, technological evolution, history, social organization, and political structure. the system and natural sources as main factors. These factors give context, content and set the condition and parameters in which an economy functions.
Central problems of an economy:
Three reason behind the central problems of an economy
- What to produce?
- how to produce?
- for whom to produce?
What to produce?
This is about making judgments about which commodities to produce and what quantities to produce. There is a scarcity of Labor, land, machinery, capital, equipment, tools and natural resources. As a result, it is impossible to meet society's demands. As a result, it's critical to determine what goods and services must be produced and in what quantities.
For example: Rita on our point of land. She must consider what crop she should grow on it. Let's say she has the option of Jowar and Wheat. Given the scarcity of natural resources such as land, she must decide whether to use the land to grow Jowar and Wheat or both.
Almost everyone in society is confronted with the challenge of “what to produce and in what quantities to make”.
How to produce?
factors of production that are both variable and fixed some of the elements of production that the firm requires are only available in fixed quantities in the short run.
Scale of a company's factory machinery and other capital equipment, for example, cannot be changed daily. The firm can modify the size of its factory and its usage of machinery and equipment in the long run, but the quantities of these production components are deemed fixed in the short run. The short run is defined as when certain production characteristics cannot be changed. Long run is defined as the time spent during which all production factors can be changed.
For whom to produce?
This entails determining the final consumer of the goods or services produced. Because every product cannot satisfy all portions of society due to differences in consumer paying capacity each is developed for a certain section of society.
Inequality in the allocation of money can be seen throughout society, resulting in a disparity in the consumer's paying capacity.
For example: Luxury goods and services are reserved for the wealthy.
QUES:What is economics? and what is the meaning of wealth definition and welfare definition?
ANSWER:The mix is the study of scarcity and how it affects the use of resources, the production of goods and services, the growth of production and well-being over time and greal variety of other complex issues of versatile concern to society.
#Wealth:
wealth measures the value of all assets of worth owned by a person,community,Company or country. Wealth is determined by taking the total market value of all physical and intangible assets and then subtracting all debts.
Wealth is the Accumulation of scarce sources that can be measured in terms of either real goods and money value.
Net worth is the most common measure of wealth determined by taking the total market value of all physical and intangible assets owned then subtracting all debts.
Measuring wealth in terms of money overcomes the problem evaluating built in the form of different kinds of goods.
For business, wealth is also means by shareholders equity and book value.
#Welfare:
Economic welfare is the level of prosperity and standard of living of either an individual or a group of persons.In the field of economics, it especially refers to utility gained through the achievement of material goods and services.
It refers to the part of social welfare that can be fulfilled through economic activity.
Welfare is dependent on factors like employment, income, distribution, labor condition, leisure time, production and the scarce possible uses of the environmental function.
Economic welfare is measured in different ways, depending on the preferences on those measuring it.
Comments
Post a Comment