ba llb 1st semester economics notes pdf

ba llb 1st semester economics notes pdf

In this post,

present upon you B.A. LL.B.first semester,(paper IV)  Economics-I (code: BL-104) notes.

What is an Economic problem ? Discuss the scope of Economic Theory.
Ans. The Economic Problem Scarcity and Choice Economic theory enunciates the laws and principles which govern the functioning of an economy and its various parts. An economy exists because of two basic facts. First, human wants for goods and services are unlimited, and secondly, productive resources with which to produce goods and services are scarce. With our want being virtually unlimited and resources scarce, we cannot satisfy all our wants and desires by producing everything we want. That being the case, a society has to decide how to use its scarce resources to obtain the maximum possible satisfaction of its members. It is this basic problem of scarcity which gives rise to many of the economic problems which have long been the concern of economists.

Since it is not possible to satisfy all wants with the limited means of production, every society must decide some way of selecting those wants which are to be satisfied. The necessity for economising arises therefore from the fact that we have limited productive resources such as land, raw materials, skilled manpower, capital equipment etc. at our disposal. These resources being found in limited quantity (the quantity may however increase over time), the goods they can produce are alsó limited. Goods are thus scarce because the productive resources are scarce. Since the resources are limited in relation to our wants, we should get the most out of what we have. Thus a society is faced with the problem of choice-choice among the vast aray of wants that are to be satisfied. If it is decided to use more resources in one line of production, then resources must be withdrawn from the production of some other goods. The scarcity of resources therefore compels us to choose among the different channels of production to which resources are to devoted. In other words, we have the problem of allocating scarce resources so as to achieve the greatest possible satisfaction of wants. This is the economic. It is also called the economising Problem.
Since all wants cannot be satisfied due to scarcity of resources we face the problem of choice – choice among multiple wants which are to be satisfied. If its is decided to use more resources in one line of production, some resources must be withdrawn from another commodity.Thus, the problem of choice from the view point of the society as a whole

refers to which goods and in what quantities are to be produced and productive resources allocated for their production accordingly so as to achieve greatest possible satisfaction of the people. An eminent English economist Lord Robbins defines economics in terms of this basic economic problem. According to him, “Economics is a science which studies human behaviour as a relalionship between ends and scarce resources which have alternative uses. ” Here ends refer to wants which are considered to be unlimited.

ba llb 1st semester economics notes pdf
ba llb 1st semester economics notes pdf

The scarcity of resources also comples us to decide how the different goods should be produced, that is, what production methods should be chosen for the production of goods so as to make best possible use of the available resources. If the resources were unlimited, the problem of how goods should be produced would not have arisen. This Is because with unlimited resources it would not matter whichever method, efficient or inefficient, was employed for production of goods.
Further, due to scarcity of resources goods cannot be produced in abundant quantities to satisfy all wants of all the people of society. This raises another problem of choice, namely, who should get how much from the national output. This means how the national product is   distributed among various members of a society.    Thus, problem of scarcity gives rise to some problems generally known as basic economic problems which a society has to solve so as to promote material well-being of its people. These basic economic problems relate to what commodities are to be produced, how they are to be produced, how the national product is to be distributed among the people, and how much to provide for future growth. It is with regard to these problems of resource allocation, the choice of production methods, distribution and economic growth, which have their roots in scarcity of resources, that economists have been asking questions from time to time and providing answers for them. Besides, economists have also been raising questions about the efficiency of the resource allocation for the production of goods and their distribution among the people. This question of economic efficiency is aimed at knowing whether or not a particular pattern of production and distribution ensures maximum social welfare.

The Scope of Economic Theory and Basic Economic Problems

There has been a lot of controversy among economists about the scope of economic theory or its subject matter. The subject-matter of economics or economic theory has been variously defined. According to Adam Smith, economics enquires into the nature aud causes of the wealth of nations. According to Ricarcdo, economics studies “how the produce of the earth is distributed”, that is, economics deals with the distibution of income and wealth. According to Marshall, economics is a study of mankind in the ordinary business of life and examines that part of individual and social action which is connected with material requisites

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