1.Define Economics and Explain the term Industrial Economics . The father of Economics Adam Smith economics as ‘An inquiry into the nature and causes of the wealth of nations’ According to Alfred Marshall ‘Economics is the study of mankind in the ordinary business of life, it examines that part of individual and social action which is mostly connected with the attainment and with the use of the material requisites of well being. Explanation- Economics is the study of man’s actions in the ordinary business of life, it inquires as to how he gets his income and how he utilizes it. Thus on one hand it is study of wealth and on other it is the study of man. Lionel Robbins has defined it more precisely as ‘ Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses’ Or in simpler words Economics is the science of choice in face of unlimited ends and scarce resources that have alternative uses. Industrial economics is a distinctive branch of economics which deals with the economic problems of firms and industries, and their relationship with society. It is concerned with the working, growth and structures of the industrial sector (firms and industries) of the country, management and organization of the industries and problems and prospects of industrial growth. There are two broad elements of industrial economics. The first one, known as the descriptive element and it deals with the information about the competitors, natural resources and factors of production and government rules and regulations related to the concerned industry. The second element of the subject is concerned with the business policy and decision-making. This is the analytical part dealing with topics such as market analysis, pricing, choice of techniques, location of plant, investment planning, hiring and firing of labor, financial decisions, product diversification and so on.
2.Distinguish between Micro Economics and Macro Economics.
Micro Economics| Macro Economics|
1.It deals with individual economic units| 1.It deals with the whole economies with its aggregate.| 2. Micro Economics studies the problems of individual economic units such as a firm, an industry, a consumer etc.| 2. Macro Economics studies economic problems relating to an economy viz., National Income, Total Savings etc.| 3. Micro Economic studies the problems of price determination, resource allocation etc.| 3. Macro Economics studies the problems of economic growth, employment and income determination etc.| 4.It tackles demand and supply of particular good| 4.It tackles aggregate demand and supply of the whole economy.| 5. While formulating economic theories, Micro Economics assumes that other things remain constant.| 5.In Macro Economics economic variables are mutually inter-related independently.| 6. The main determinant of Micro Economics is price.| 6.In Micro Economics economic variables are mutually inter-related independently.|
3.Explain the Problem of Scarcity of Economic resources.
Why does the problem of choice arises in economics.
Explain the statement ‘Economics is the science of choice in face of unlimited ends and scarce resources that have alternative uses’ Or
Explain the fundamental problem of Economics
The need for making choice arises because of some basic facts of human life & economic life- 1.Human wants, desires and aspirations are limitless and endless- -The history of human civilization shows us that human desire to consume more and more of better and better goods and services has been increasing continuously. For example housing need has risen from a hut to a luxury palace and if possible house in space. Also need for means of transportation has risen from horse, bullock cart to supersonic jet planes. -Human wants are endless and goes on increasing due to following...