Definition of economics
Basic economic concepts: economic resources, human wants, scarcity
and choice, opportunity cost, production possibility curves/frontiers
Scope of economics: Micro and macro economics
Methodology of economics: positive and normative economics, scientific methods, economics as a social science.
Economic systems: free market economy, mixed economy.
Definition
Individual demand versus market demand
Factors influencing demand
Exceptional demand curves
Types of demand
Movement along and shifts of demand curves
Elasticity of demand
Types of elasticity: price, income and cross elasticity
Measurement of elasticity; point and arc elasticity
Factors influencing elasticity of demand
Application of elasticity of demand in management and economic
policy decision making
Definition
Individual versus market supply
Factors influencing supply
Movements along and shifts of supply curves
Definition of elasticity of supply
Price elasticity of supply
Factors influencing elasticity of supply
Application of elasticity of supply in management and economic policy decision making
Interaction of supply and demand, equilibrium price and quantity
Mathematical approach to equilibrium analysis
Stable versus unstable equilibrium
Effects of shifts in demand and supply on market equilibrium
Price controls
Reasons for price fluctuations in agriculture
Approaches to the theory of the consumer - cardinal versus ordinal approach
Utility analysis, marginal utility (MU), law of diminishing marginal utility (DMU)
Limitations of cardinal approach
Indifference curve analysis; Indifference curve and budget line
Consumer equilibrium; effects of changes in prices and incomes on consumer equilibrium
Derivation of a demand curve
Applications of indifference curve analysis: substitution effect and income effect for a normal good, inferior good and a giffen good; derivation of the Engels curve
Consumer surplus /Marshallian surplus
Factors of production
Mobility of factors of production
Short run analysis
Total product, average and marginal products
Stages in production and the law of variable proportions/the law of diminishing returns
Long run analysis
Isoquant and isocost lines
The concept of producer equilibrium and firm’s expansion curve
Law of returns to scale
Demand and supply of factors of production
Wage determination theories
Trade unions: functions and challenges
Producer surplus/economic rent/Marshallian surplus
Short run costs analysis and size of the firm’s total cost, fixed cost, average cost, variable costs and marginal cost
Long run costs analysis
Optimal size of a firm
Economies and diseconomies of scale
Definition of a market
Necessary and sufficient conditions for profit maximization
Mathematical approach to profit maximization
Output, prices and efficiency of: perfect competition, monopoly, monopolistic competition, oligopolistic competition
Definition of national income
Circular flow of income
Methods/approaches to measuring national income
Concepts of national income: gross domestic product (GDP), gross national product (GNP) and net national product (NNP), net national income (NNI) at market price and factor cost, disposable income
Difficulties in measuring national income
Uses of income statistics
Analysis of consumption, saving and investment and their interaction in a simple economic model
Determination of equilibrium national income
Inflationary and deflationary gaps
- The multiplier and accelerator concepts
- Business cycles/cyclical fluctuations
The differences between economic growth and economic development
Actual and potential growth
The benefits and costs of economic growth
Determinants of economic development
Common characteristics of developing countries
Role of agriculture and industry in economic development
Obstacles to economic development
The need for development planning
Short term, medium term and long term planning tools
Challenges to economic planning in developing countries
The nature and functions of money
Demand and supply of money
Theories of demand for money: The quantity theory, the Keynesian liquidity preference theory
Definition of commercial banks
The role of commercial banks and non-banking financial institutions in the economy
Credit creation
Definition of central bank
The role of the central bank; traditional and changing role in a liberalised economy, such as financial sector reform, exchange rate reform
Monetary policy, definition, objectives, instruments and limitations
Determination of interest rates and their effects on the level of investment, output, inflation and employment
Harmonisation of fiscal and monetary policies
Simple IS–LM Model
Partial equilibrium and general equilibrium
Definition of unemployment
Types and causes of unemployment
Control measures of unemployment
Relationship between unemployment and inflation: the Phillips curve
Definition of International trade
Theory of absolute advantage and comparative advantage
World trade organization (WTO) and concerns of developing countries
Protection in international trade
Regional integration organizations, commodity agreements and the relevance to less developed countries (LDCs)
Terms of trade, balance of trade, balance of payments (causes and methods of correcting deficits in balance of payments), exchange rates, types of foreign exchange regimes, factors influencing exchange rates, foreign exchange reserves
International financial institutions: International Monetary Fund (IMF) and World Bank
National debt management: causes and interventions
Structural Adjustment Programmes (SAPs) and their impacts on the LDCs
The contemporary term “economics” comes from the Greek word “oikonomos,” which means “steward.” The two halves of this word, “Oikos,” which means “home,” and “nomos,” which means “manager,” sum up economics. How do we run our household, and what kind of stewardship account can we give to our homes and the country? Economics is a broad theory of how society functions.
A prominent classical economist, Alfred Marshal, defined economics as “the study of man in his regular business of life.” This, however, is an overly broad description. This is because any definition should take into account the governing principle of economics, which is scarcity.
As defined by the great American economist Paul Samuelson: “The study of how people and society choose to use scarce resources that could be put to other uses to produce various commodities and distribute them for consumption among multiple individuals and groups in society, now and in the future.
According to the definition of scarcity in economics, all resources are scarce because there aren’t enough to satisfy everyone’s wants to the point of satiety. As a result, another feature of economics is that it involves choice. Human desires are limitless.
Economics is the branch of knowledge concerned with the production, consumption, and transfer of wealth.
Economics can be described as “the social science concerned with the allocation of scarce resources to provide goods and services that suit the requirements and wants of customers”
Lionel Robbins defined economics as “the science which studies human behaviour as a relationship between (given) ends and scarce means which have alternative uses.”
The economist restricts the research by focusing on four critical aspects of human existence and examining what occurs when they are all found together, as they frequently are:-
Human beings have limitless desires.
Those desires are of varying degrees of importance.
The resources available to fulfill such desires — human time, energy, and material resources – are scarce.
The means can be put to various uses, i.e., they can be employed to make various things.
However, the economist isn’t interested in any one characteristic in isolation. On the contrary, an economic problem arises only when all four traits are present together.
Resources are the materials that economists mix to create economic commodities, which are scarce in relation to demand.
There are two types of resources:-
Economic Goods: Economists group all items that people seek together and call them economic products, which are scarce in accordance with demand.
Free goods: These are goods that people can have in unlimited quantities, such as air.
