Tamilnadu Samacheer Kalvi 11th Economics Notes Chapter 1 Introduction To Micro-Economics Notes
→ Economics is everywhere and understanding economics can help you make better decisions and lead a happier life. – Tyler Cowen.
→ The term or word ‘Economics’ comes from the Ancient Greek oikonomikos (oikos means “households”; and, nomos means “management”, “custom” or “law”).
→ Adam Smith (1723-1790), in his book “An Inquiry into Nature and Causes of Wealth of Nations” (1776) defines “Economics as the science of wealth”.
→ The publication of Adam Smith’s “The Wealth of Nations” in 1776, has been described as “the effective birth of economics as a separate discipline”.
→ The scope of the subject of Economics refers to on the subject-matter of Economics.
→ Economics focuses on the behaviour and interactions among economic agents, individuals and groups belonging to an economic system.
→ Economics studies the ways in which people use the available resources to satisfy their multiplicity of wants.
→ Art is the practical application of knowledge for achieving particular goals.
→ ‘Utility’ means ‘usefulness’. In Economics, utility is the want-satisfying power of a commodity or a service.
→ Prof. Stigler states that “equilibrium is a position from which there is no net tendency to move”.
→ According to Engel’s Law “The proportion of total expenditure incurred on food items declines as total expenditure [which is proxy for income] goes on increasing.”
→ Alfred Marshall has rightly remarked: “Inductive and Deductive methods are both needed for scientific thought, as the right and left foot are both needed for walking”.
→ Micro economics is the study of the economic actions of individual units say households, firms or industries.
→ Macro economics is the obverse of micro economics. It is concerned with the economy as a whole. It is the study of aggregates such as national output, inflation, unemployment and taxes.
→ The terms ‘micro economics’ and ‘macro economics’ were first used in economics by Norwegian economist Ragner Frisch in 1933.
→ The problem of choice between relatively scarce commodities due to limited productive resources with the society can be illustrated with the help of a geometric device, is known as production possibility curve.
→ Scarcity: The gap between what people want and what people can get
→ Production: Creation of utility
→ Distribution: Share of the national income reaching the four factors of production
→ Services: Services, like goods, are economic entities; and are inseparable from their owners and are intangible, perishable in nature
→ Value: Power of a commodity to command other commodities in an exchange
→ Price: Value of a commodity expressed in terms of money
→ Income: The amount of monetary or other returns, either earned or unearned, accruing over a period of time
→ Deductive Method: Deduction is a process in logic facilitating or arriving at an inference, moving from general to particular
→ Inductive Method: Induction is a process in logic facilitative or arriving at an inference, moving from particular to general