Basic Concepts of Economics

Basic Concepts of Economics

Concepts 

• Human Wants 

• Consumption

• Sustainable Consumption 

Utility 

Utility refers to the want satisfying power of a commodity. 
Total Utility 
Marginal Utility 
Diminishing Marginal Utility 

Types of Utility 

1. Form Utility 
2. Place Utility 
3. Time Utility 
4. Service Utility 

Production 

The act of making goods and services is called as Production.
Factors of Production:
1. Land 
2. Labour 
3. Capital 
4. Enterprise 

Price 

The unit or amount of money that has to be given to get  commodity is called as the Price.
General Price Level 
Inflation 
Deflation 

Value 

Value of a commodity refers to the valuation placed by a household on the consumption of a commodity.
Value- in- use 
Value- in- exchange - Nominal Value and Real value 

Market 

Goods Market 
Factor Market 

Money 

Anything that is generally acceptable as a means of exchange and, at the same time, acts as a measure and store of value is called as money. 
Currency 
Deposit Money or Bank Money

Income 

National Income 
GDP 
National Income= GDP + Net factor income from abroad.
Per capita Income= National Income / Population.

Saving 

Personal Saving 
Individual Saving 
Business Saving 
Government Saving 
Private Saving 
Aggregate Saving 

Investment 

Major Components 
Producer's Investment 
Investment in Residential Housing and Non-residential Structure
Investment in Stocks

Wealth 

Anything to be regarded as wealth should posses:
Utility 
Scarcity 
Transferability
Exchange Value  

Welfare 

Economic Welfare 
Non Economic Welfare 

Business Cycle 

Expansion or Prosperity 
Recession
Depression
Recovery or Revival 

Aggregate Demand and Aggregate Supply 

Aggregate demand is the total amount of goods which all the buyers of final output in the economy desire to purchase. 
AD = C+I+G

Aggregate Supply is the total amount of output which all the firms or producers are willing to produce in an economy. 

Multiple Choice

Want satisfying power of the commodity is called as ____

• Desire

• Utility

Multiple Choice

A large decrease in the general price level is called as _______

• Deflation

• Inflation

Multiple Choice

Medical treatment provided by the doctor is ______ type of Utility.

• Form

• Service

Multiple Choice

Tendency of decrease in the marginal utility with successive increase in the consumption of a commodity is known as ____.

• Total Utility

• Diminishing Marginal Utility

Multiple Choice

Wants recur but not multiply

• True

• False

Multiple Choice

Production is the process that creates utility.

• True

• False