Professional Documents
Culture Documents
Economic Activity and Economic Theory
Economic Activity and Economic Theory
and
Economic Theory
I. Definition of Economics
V. Price Theory
Definition
Economics is the science that deals with the production, allocation, and use
of goods and services.
Definition
ECONOMIC ACTIVITY
The primary aim of the economic activity is the production of goods and services
with a view to make them available to consumer.
"Human activities which are performed in exchange for money or money's worth are
called economic activities."
1. Human wants
2. Resources
3. Techniques of production
4.
Human wants
"Human wants" are those things that people desire to have above what they truly
need in order to live. Only a limited number of needs actually exists, but wants are
virtually unlimited, restricted only by a person's imagination.
RESOURCES
Resources are materials, energy, services, staff, knowledge, or other assets that are
transformed to produce benefit.
CHARACTERISTICS OF RESOURCES
1. Limitedness
Limitedness of Resource is of two types namely Qualitative and
Quantitative. Human Resources are Qualitatively limited where as Non-human
resources are Quantitatively limited .
TECHNIQUES
Techniques are the know-how and the physical means of transforming resources
into want-satisying form.
2. Collection of Data:
The second step is to collect data or facts pertaining to the problem to be
explored. If the problem is simple the data can be easily collected.
3. 3. Classification of Data:
The data are enumerated, classified and analysed. For instance, if the problem
is to study the trend in population growth, the census data may be collected and
classified by sex, age groups, literacy, marital status, occupational distribution etc.
4. Formulation of Hypothesis:
A hypothesis is a suggested answer to a problem by the aid of which we
endeavour to explain facts by discovering their orderliness. The hypothesis arises
from the observed facts, experience or previous knowledge of the researcher.
5. Testing of Hypothesis:
The hypothesis should be tested by well-established techniques of logic and
statistics which may then be subjected to confirmation. A successfully tested
hypothesis is a theory.
6. Verification of Theory:
The tested hypothesis or theory should be verified. The process of verification
may be carried out by observation or by checking the consistency of the theory with
related facts that are believed to be true.
7. Formulation of Solutions:
Once the theory is verified and proved true, possible solution or suggestions to
the problem under investigation are to be formulated. This final stage relates to
applied economics and involves value judgements.
For instance, if we find that with the increase in the supply of flour, its price does
not fall, given the demand for flour,we can predict that there is likely to be shortage
of flour in the coming year.
Price theory, is a microeconomics principle that involves the analysis of supply and
demand in determining an appropriate price point for a good or service. The goal is
to achieve equilibrium in which the quantities of goods or services provided match
the corresponding market's desire and ability to acquire the good or service.
https://www.merriam-webster.com/dictionary/economics
http://www.economicsonline.co.uk/Competitive_markets/What_is_economics.html
https://dmarron.com/2009/08/17/the-50-most-important-economic-theories/
http://www.economictheories.org/
http://www.businessdictionary.com/definition/economic-activity.html
http://www.yourarticlelibrary.com/economics/economic-activities-meaning-characteristics-and
-objectives/42019/
https://www.quora.com/What-are-some-examples-of-economic-activity