Modern definition :
In Benham’s word “Economics is a study of the factors affecting the size, distribution and
stability of country national income”.
In short economics may be defined as a social since concerned with the proper uses and
allocation of resources for the achievement and maintenance of growth with stability.
Major Economic Problems:
An economic problem exist because
● Our resources are limited. (money, land, labour, machine).
● Our wants are unlimited.
Because of this, we must choose how to use limited resources to get maximum satisfaction
or maximum profit.
● A consumer want to get maximum satisfaction from limited income.
● A producer want to get maximum profit from limited resources.
So economy studies how to use resources in the best possible way.
Fundamental Problem of an economy
1) What to produce :
Which goods should be produce.
Ex. food or luxury
2) How to produce :
Which method should be used?
(i) labour intensive
(ii) capital intensive
3) For whom to produce :
Who will use the goods
4) Are resources economically used :
Use resources efficiently.
5) Full employment :
All worker and resources are fully used with out waste.
6) Growth :
Increase production over time through better use of resources and technology.
In Benham’s word “Economics is a study of the factors affecting the size, distribution and
stability of country national income”.
In short economics may be defined as a social since concerned with the proper uses and
allocation of resources for the achievement and maintenance of growth with stability.
Major Economic Problems:
An economic problem exist because
● Our resources are limited. (money, land, labour, machine).
● Our wants are unlimited.
Because of this, we must choose how to use limited resources to get maximum satisfaction
or maximum profit.
● A consumer want to get maximum satisfaction from limited income.
● A producer want to get maximum profit from limited resources.
So economy studies how to use resources in the best possible way.
Fundamental Problem of an economy
1) What to produce :
Which goods should be produce.
Ex. food or luxury
2) How to produce :
Which method should be used?
(i) labour intensive
(ii) capital intensive
3) For whom to produce :
Who will use the goods
4) Are resources economically used :
Use resources efficiently.
5) Full employment :
All worker and resources are fully used with out waste.
6) Growth :
Increase production over time through better use of resources and technology.
