E-LESSON-2 MICRO ECONOMICS-1 ENG

IDOL Institute of Distance and Online Learning ENHANCE YOUR QUALIFICATION, ADVANCE YOUR CAREER.

B.A.English 2 All right are reserved with CU-IDOL Microeconomics-I Course Code: BAQ108 Semester: First e-Lesson: 2 SLM Unit: 2 www.cuidol.in Unit-2(BAQ108)

MICRO ECONOMICS 33 OBJECTIVES INTRODUCTION In this unit we are going to learn Student will be able to understand the need and about the concept of Micro want economics. Student will be able to understand the scarcity . Under this you will be able to understand need and wants and Student will be able elaborate how economic economic problems problem relates to scarcity and choice. Student will be able to discuss role of economics in decision making www.cuidol.in Unit-2(BAQ108) INSTITUTE OF DISTANACEll ArNigDhtOaNrLeINreEsLeErAvRedNIwNiGth CU-IDOL

TOPICS TO BE COVERED 4 Concept of Needs and wants.  Concept of Scarcity Role of economics in decision making www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

Needs 5 All right are reserved with CU-IDOL Needs –A need is something you have to have, something you can't do without. A good example is food. If you don't eat, you won't survive for long. Many people have gone days without eating, but they eventually ate a lot of food. You might not need a whole lot of food, but you do need to eat. www.cuidol.in Unit-2(BAQ108)

Wants 6 Want is something you would like to have. It is not absolutely necessary, but it would be a good thing to have. A good example is music. Now, some people might argue that music is a need because they think they can't do without it. But you don't need music to survive. You do need to eat. www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

7  Every need or want can be satisfied through the consumption of a good or service  Goods and services are produced with resources ( factors of production) which are finite and have alternative uses.  The Basic /Fundamental economic problem is the scarcity of resources relative to human needs and wants www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

Key Differences Between 8 Needs and Wants  The term ‘needs’ is defined as an individual’s basic requirement that must be fulfilled, in order to survive. Wants are described as the goods and services, which an individual like to have, as a part of his caprices.  An individual needs are limited while his wants are unlimited.  Needs are something that you must have, in order to live. On the contrary, wants are something that you wish to have, so as to add comforts in your life.  Needs represents the necessities while wants indicate desires.  Needs are important for the human being to survive. As against this, wants are not as important as needs, because a person can live without wants.  Needs are those items, that are required for life and does not change with time. As opposed to, wants are those items, that are desired by an individual either right now or in future. Therefore, wants might change over time.  As needs are essential for life, non-fulfillment may lead to illness or even death. In contrast wants are not essential for living and so non-fulfillment, does not have a great impact on a person’s life, however, disappointment may be there. www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

Scarcity 9 All right are reserved with CU-IDOL Scarcity refers to resources being finite and limited. Scarcity means we have to decide how and what to produce from these limited resources. It means there is a constant opportunity cost involved in making economic decisions. Scarcity is one of the fundamental issues in economics. www.cuidol.in Unit-2(BAQ108)

Choice 10 Choice refers to the ability of a consumer or producer to decide which good, service or resource to purchase or provide from a range of possible options. Being free to chose is regarded as a fundamental indicator of economic well being and development. www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

Economics is about Choice 11 www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

The economic problem 12 All societies face the economic problem, which is the problem of how to make the best use of limited, or scarce, resources. The economic problem exists because, although the needs and wants of people are endless, the resources available to satisfy needs and wants are limited. www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

Limited resources 13 Resources are limited in two essential ways:  Limited in physical quantity, as in the case of land, which has a finite quantity.  Limited in use, as in the case of labour and machinery, which can only be used for one purpose at any one time. www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

Multiple Choice Questions 14 1. Human wants are (a) Unlimited (b) Several (c) Social (d) Money spending 2. Choices Challenges (a) Rationality (b) Scarcity (c) Decisions (d) All the above 3. Business prospers only when (a) Conscious (b) Rational (c ) Pragmatic ( d) Policy Oriented Answers: 1.(a) 2.(b) 3.( c) www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

Summary 15  Needs: the necessities of life e.g. Food, clothing, shelter, warmth, medical care  Want :those things that make life enjoyable and pleasurable e.g. Designer clothes, cars, mansions  Scarcity: The fact that there is a limited amount of resources to satisfy unlimited wants.  Choice- refers to the ability of a consumer or producer to decide which good, service or resource to purchase or provide from a range of possible options www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

Frequently Asked Questions 16 Q1.Define Want? Ans: Economic wants are desires that can be satisfied by consuming a good, service, or leisure activity. Because people have differing economic wants, they purchase a wide variety of goods and services or choose to \"consume\" differing amounts of leisure time. Q2.Diffrence between want and need? Ans:- A need is something you have to have to survive or complete a task. A want is simply the desire for something, in many cases something to satisfy a need. You need food to survive. Q3. Why is choice essential in the study of economics? Ans: The choice is important in economics since it is a decision which needs to be taken by an individual, in regards to the limited resources. The choice is the decision made by the people under the situation of scarcity of resources. It is the process of getting maximum satisfaction by using limited resources. People have unlimited wants and desires, the goods and services are limited in the economy and there is a scarcity. Due to this reason, it is necessary to make a choice. www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

REFERENCES 17 1. Ahuja, H.L.(1999). Advanced Economic Theory. New Delhi: S.Chand&Co. 2. Chopra,P.N.(1998). Micro Economic Theory and Welfare Economics. New Delhi: Kalyani Publishers. 3. Chopra,P.N.(2006). Advanced Economic Theory. New Delhi: Kalyani Publishers. 4. Lekhi, R.K., Walia, H.S. & Talwar,S.J.(2003).Micro Economics. New Delhi: Kalyani Publishers. 5. Lipsey,R.G. & Chrystal, K.A.(2004). Economics. New Delhi: Oxford University Press. 6. Mandal,R.K.(2007). Micro Economics Theory. New Delhi: Atlantic Publishers. 7. Ray, N.C.(1980). An introduction to Micro Economics. New Delhi: The Macmillan Company of India. 8. Salvatore,D. (2003). Micro Economics: Theory & Applications. New York: Oxford University Press. 9. Singh,M. (1971). MangSidhant Ate Mishrat Arth-VivsthaVich Arthik Ganana. Patiala: Punjabi University. 10. Vohra, P.& Mehta,R. (2007). Micro Economics. New Delhi: Commonwealth Publishers. www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL

18 THANK YOU For queries Email: [email protected] www.cuidol.in Unit-2(BAQ108) All right are reserved with CU-IDOL