Tag: economics

Human wants are unlimited and resources are limited which leads to problem of choice. Thus the statement, 'there are limited wants' - is incorrect.

An inferior good is a good whose demand decreases when consumer income rises. 

A normal good's demand increases when the income rises, thus its income effect is positive.

Hence, the income effect for inferior good is negative.

For example as a consumer's income increases, his/her demand of the cheap cars will decrease, while demand for costly cars will increase. Here the cheap car is an inferior good for that consumer.

John Maynard Keynes, was a British economist. His ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. He built on and greatly refined earlier work on the causes of business cycles, and is widely considered to be one of the most influential economists of the 20th century and the founder of modern macroeconomics.

Wealth is defined as "anything which is useful, directly or indirectly, for satisfying human wants". Characteristics of wealth include:

• Externality is the quality of wealth which makes it valuable and able to be transferred.
  
• Appropriability: Wealth should be appropriate. It should be capable of being possessed or owned by the people.
  
• Transferability: Wealth should be transferred from one man to another. 

Wealth can be classified as personal wealth, social wealth or collective wealth, national wealth, and international wealth.

Personal Wealth (Individual Wealth): The wealth of a person consists of both material and non-material goods. Thus the wealth of the person includes such material things as land, houses, furniture, machinery and so on.

Social Wealth (Collective Wealth): Social wealth consists of all these goods that can be enjoyed by all members of a society. Social wealth includes public roads, public parks, public schools, government hospitals, public libraries, museums and so on.

National Wealth: National wealth includes individual wealth as well as the collective wealth of its members. That is, it includes besides individual wealth all kinds of public property, such as roads and canals, buildings and parks and water works.

Cosmopolitan Wealth: Cosmopolitan wealth is the wealth of the world. It belongs to no one nation in particular. A common example of cosmopolitan wealth is the ocean.

According to Marshall's definition, wealth is only a means to welfare. Marshall pointed out that for economics, wealth is not an end in itself but it is only a means to an end; the end being the promotion of human welfare. Thus, according to Marshall, wealth is only a secondary thing, it is man and his ordinary business of life which is the primary object of economic study. In fact, Marshall tried to make the study of economics an engine of social betterment.

AC Pigou defined economics as a "study of Economic welfare which is that part of social welfare that can be brought directly or indirectly into relation with the measuring rod of money". He gave more importance to the study of man than to wealth. Thus it focused more on human welfare and social science. 

Stock of man made goods (like machines) as well as natural resources(like land) ,resources like capital -is called national wealth All are referred as national assets.

In economics, stock is measured at one point of time and represent the amount of good exists at that point of time onlt and hence, wealth is a stock concept.

The increase in production of food grains indicates the increase in the welfare of the people. This is because it will directly benefit the people as they have a satisfactory level of food grains. The other options do not help the people of the economy as either these activities are illegal or they do not directly help in the production of food for the people to eat.