Learn Economics by Dr. Swati Gupta

                                       Adam Smith's Definition of Economics, it's features and criticism The classical view: Wealth Definition : The early economists like J.E. Cairnes, J.B.Say, and F.A.Walker have defined economics as a science of wealth. Adam Smith, the father of economics, in his book in 1776, “An Enquiry into the Nature and Causes of Wealth of Nations”, stated that “Economics is the science of wealth.” He defined economics as “A science which enquires into the nature and causes of wealth of nations.” According to him, wealth may be defined as those goods and services which command value-in- exchange [Value-In-Exchange means the amount of money or goods that is actually paid for a product or service.] and economics is concerned with the problems arising from wealth-getting and wealth-using activities of people. Thus, we study, in economics, about consumption, production...

Why We Study Economics Economics is the study concerned with the proper use and allocation of resources for the achievement and maintenance of growth with stability. An economy exists because of two basic facts- unlimited wants and limited resources. An individual or a society has to decide how to use its scarce resources to obtain the maximum possible satisfaction. It is this basic problem of scarcity that gives rise to many of the economic problems which have long been the concern of economists. We can say that  Economics studies the way a society chooses to use its limited resources which have alternative uses, to produce goods and services and to distribute them among different groups of people . When we study economics, we not only gain the skills needed to understand complex markets of an economy but also get strong analytical and problem-solving skills. There are four main reasons to study economics: ·       To learn a way of thinking, ·  ...

The Law of Equi-Marginal Utility Th is law explain s the consumer's equilibrium in a multi-commodity model. This law was first mentioned by H.H.Gossen, that is why it is called Gossen's second law. Further, this law was refined by Alfred Marshall. It is also known as the law of ''Maximum Satisfaction" or the law of substitution. This law states that a consumer consumes various goods in such a way that the marginal utility derived per unit of expenditure on each good is the same. According to Marshall, " If a person has a thing which can be put to several uses, he will distribute it among these uses in such a way that it has the same marginal utility in all . " There are limited resources to fulfill unlimited wants. Every consumer wants maximum satisfaction with the minimum income. For this purpose, he substitutes the more useful for the less useful thing. He spends his income in such a manner that marginal utility in each direction of his purchases has be...

UTILITY ANALYSIS What is utility:  The quality of a good or service, which satisfies human wants, is called utility. The utility is the ability to satisfy human wants. Example : If a person is thirsty and he drinks water to quench his thirst, it means that water has the quality to satisfy his thirst. This quality of water is called utility. Characteristics / Features of Utility: Utility is not equated with usefulness : A  good that might have the capacity to satisfy a particular want but it might not be useful for a consumer, such as alcohol provides utility for the liquor but it is harmful.  Utility is a psychological concept:  It means that the satisfaction obtained from the consumption of a good or service, depends on the mental aspect of the person.  Utility is always individual and relative: U tility differs from person to person. A different person will get different utility or satisfaction from the same commodity.  Even it  varies in diffe...