Principles of Agricultural Economics
Lecture no.1 Economics – Meaning, Definitions, Subject matter of Economics – Traditional approach – consumption, production, exchange and distribution ECONOMICS Economics is popularly known as the “Queen of Social Sciences”. It studies economic activities of a man living in a society. Economic activities are those activities, which are concerned with the efficient use of scarce means that can satisfy the wants of man. After the basic needs viz., food, shelter and clothing have been satisfied, the priorities shift towards other wants. Human wants are unlimited, in the sense, that as soon as one want is satisfied another crops up. Most of the means of satisfying these wants are limited, because their supply is less than demand. These means have alternative uses; there emerge a problem of choice. Resources being scarce in nature ought to be utilized productively within the available means to derive maximum satisfaction. The knowledge of economics guides us in making effective decisions. The subject matter of economics is concerned with wants, efforts and satisfaction. In other words, it deals with decisions regarding the commodities and services to be produced in the economy, how to produce them most economically and how to provide for the growth of the economy. Subject matter of economics Economics has subject mater of its own . Economics tells how a man utilises his limited resources for the satisfaction of unlimited wants. Man has limited amount of time and money. He should spend time and money in such away that he derives maximum satisfaction. A man wants food, clothing and shelter. To get these things he must have money. For getting money he must make an effort. Effort leads to satisfaction. Thus, wants- efforts- satisfaction sums up the subject mater of economics initially in a primitive society where the connection between wants efforts and satisfaction is direct . Divisions of Economics The subject matter of economics can be Traditional approach and Modern approach. Traditional Approach It considered economics as a science of wealth and divided it into four divisions viz., consumption, production, exchange and distribution 1. Consumption: It means the use of wealth to satisfy human wants. It also means the destruction of utility or use of commodities and services to satisfy human wants. 2. Production: It is defined as the creation of utility. It involves the processes and methods employed in transformation of tangible inputs (raw materials, semiexplained under two approaches viz.,
finished goods, or subassemblies) and intangible inputs (ideas, information, know -how) into goods or services. 3. Exchange: It implies the transfer of goods from one person to the other. It may occur among individuals or countries. The exchange of goods leads to an increase in the welfare of the individuals through creation of higher utilities for goods and services. 4. Distribution: Distribution refers to sharing of wealth that is produced among the different factors of production .It refers to personal distribution and functional distribution of income. Personal distribution relates to the forces governing the distribution of income and wealth among the various individuals of a country. Functional distribution or factor share distribution explains the share of total income received by each factor of production viz., land, labour, capital and organisation. Lecture No.2 Modern Approach – Microeconomics and macroeconomics - Methods of economic investigation – Deduction & , Induction Modern Approach : This approach divides subject matter of economics into two divisions i.e., micro economics and macro economics. The terms „micro-„ and „macro-„ economics were first coined and used by Ragnar Frisch in 1933. 1. Micro-Economics or Price Theory: The term „micro-economics‟ is derived from the Greek word „micro‟, which means small or a millionth part. It is also known as „price theory‟. It is an...
Please join StudyMode to read the full document