Vedaniti,
Lear UNE Online
Basic Concepts of Economics
Introduction to Economics
Economics is not only a subject but also a regular practice in every individual's life. It is a way
of balancing the financial inputs and outputs. Whether it is a small family or large family, small
business firm or a big organization, and individuals pocket money, etc. whatever it is one should
plan before the month or count at the end of the month or year. This is what economics is trying
to balance the unlimited requirements with limited resources.
With this being said, we will begin our discussion on the subject ‘Economics’. This content is
readable for especially those students who just started their journey of Commerce in class XI.
In short, we can say that Economics is a scoring and intellectual subject which will be a worthy
study for the quest for knowledge
Definition of Economics
Economics is defined as a technique or a tool of balancing most of the needs which can be
termed as a credit and the limited resources, which can be termed as a debit. Keeping a proper
and healthy balance between these two terms is nothing but economics. It is one of the
Economics basic definitions. Apart from this, we have different basic definitions of Economics
there, based on the scenario. Before going to the fundamentals of economics, it has two
streams. Namely- macroeconomics and microeconomics.
Macroeconomics: Macro means large. Macroeconomics deals with large economic-related
issues like a whole entity or a big organization or the entire nation or the whole city or a
complete project etc. Inflation, annual budgets, scarcity, poverty, etc. can come under
macroeconomics.
Microeconomics: On the other hand, micro means small. Microeconomics deals with small
units, single apartments, individual plants, household activities, part of your project, a single
event, etc. that come under the microeconomics.Vedaniti,
eam UNE Online
List and Explain the Basic Concepts of Economics
Along with the meaning and the definition of economics, it is important to understand the basic
economic terms and concepts in detail to get the awareness of maintaining a proper budget for
the house or task or any organization. We have five fundamental economic concepts in
general. They are as follows-
1. Supply and demand
2. Scarcity
3. Opportunity cost
4. Time value of money
5. Purchasing powerVedaniti,
Lear UNE Online
+ Supply and Demand: - It is one of the basic economic concepts and theories. Supply
and demand can be seen everywhere in our daily life. To understand this concept more
clearly, let's take a common example like food products. If we take food and drinks, they
need to travel from the farmer to the consumer with multiple mediators. So, the price may
vary. The exact point of the price at which the buyer and consumer will get to a
compromising position, that point is nothing but the state of supply and demand, it means
where the demand meets the supply.
* Scarcity: - This is also the basic concept of economics, which also acts as a factor of
demand and supply. Because the supply doesn't meet the demand, then the condition is
termed as a scarcity of that particular utility, whether it is food or product or money or any
other.
+ Opportunity Cost: - It is one of the 5 basic concepts of economics. It is like a trade-off
market. It is also termed as an exchange policy like if we want something we need to
give others in the form of cash or product or whatever it is. We are creating an
opportunity to sell our goods in return for getting our requirements.
+ Value for Money: - It is one of the important concepts in economics because the value
of money may vary from time to time based on different factors. The best example of this
is the stock market. If the value of a particular stock is about 100 rupees today and it
goes on the increase to $200 or $500 within hours or days because of inflation. At the
same time, the price decreased because of deflation
+ Purchasing Power: - Another fundamental economic concept is the purchasing power of
consumers because if we take gold as an example, even though the price of gold is
reduced, the buyer may not have the ability to purchase food at that particular time. If he
can purchase some amount of gold, the price may increase. That ability of the consumer
is called the purchasing power.
These are some basic concepts of economics. As it is a wide concept, its scope spreads
broadly and can derive several definitions in different scenarios. Among the five basic concepts,
3 fundamentals of economics were most important. Supply and demand, the value of money,
scarcity. So, it is always important to have a good knowledge of economics to maintain equality
in our balanced budgets.eam UNE Online
Vedantu Improvement Promise
We promise improvement in marks or get your fees back. T&C Apaly*
Latest Vedantu courses for you
(Grade 11 Science |ALLAOARDS | JEE|Eng ¥
JEE 2-Year (2022-24)
Academic year 2022-24
ENGLISH
Unlimited access till final
school exam
seers >
1000+ chapter specific short courses
Physics Chemistry
Maths
216,500 for 2 yearsVedaniti,
UeamWEOnIne
Trending topics
Difference Between
National income Microeconomics and >
Macroeconomics
| eee | erence >
Consumer Rights and
| retin | ee >
Karl Pearson's Coefficient of
Correlation