13-02-2016, 10:30 AM
1. Consumption: Satisfaction of human wants is called consumption whichcomformsoneofthe important branches of economics. This tells how people behave in consumption of goods and services in order to maximize their satisfaction. duction.
2. Exchange: Goods andauupdatesservicescannotbeproducedatoneplaceorat one point of time. Goods produced by one are exchanged for the goods produc d by the others. So, exchange forms another branch of study in economics.
3. Distribution: Goods and services are produced with efforts, i.e., by combining the factors of production. These efforts have to be paid for or rew rded. The land gets rent, the labor get wages, the capital gets interest and the organizer gets profit. This branch of study is called distribution in economics.
4. Public Finance: This branch of st dy in economics studies about the sources of revenue to the government and the principles governing the expenditure for the benefit of the people. It also studies about p blic debt and financial administration.
5. Economics as.bothScience nd an Art: Economics is not only a science but also an art. It is a science in its methodology and an art in its application. It has a theoretical aspect and is also an applied science in its practical aspects
6. Capitalism: Capitalism is that profit-oriented system which is characterized by private ownership of objects of labor instruments of labor and means of labor. Production is mainly wwwcarriedoutiththe help of labor services rendered by the working class in return for wages and the class of capitalists has the right to whatever output is produced within the system.
7. Price mechanism: In a capitalist economy neither an individual nor any institution takes decisions in a planned manner concerning its day-to-day functioning. That is, there is no conscious effort to arrive at some kind of solution to its central problems.
8. Exploitation of labor: Workers are exploited under capitalism. Very often due to the freedom granted to the workers at a formal level, many people are wrongly given to believe that the workers by bargaining in the free market are able to get a fair price in return for their labor power.
9. Class contradiction: Hence, the two major classes found in a capitalist society are those of the capitalists and the workers. The clash of interests of the capitalists and the workers take the form of the class conflict with the further development of capitalism.
10. Mixed Economy: According to Samuelson, a mixed conomy is characterized by the existence of both public and private institutions exercising conomic controls.
11. Certainty: This is a state of certainty that exists only when the decision maker knows the available alternatives and the conditions and consequences of those actions. Making decisions under certainty assumes that the ecision maker has all the necessary information about the problem situation.
12. Risk: A state of risk exists when the decision maker is aware of all the alternatives, but is unaware of their consequences. In this sit ation, the decision maker at best can make guess as to which alternative to choose.
13. Uncertainty: .Mostsignificant decisions made in today’s complex environment are formulated under a state of uncertainty, where there is an unawareness of all the alternatives and so also the outcomes –even for the known alternatives. Such decisions demand creativity and the willingness to take a chance in the face of such uncertainties. In such situations, decision makers do not even have enough information to calculate degree of risk.
14. Ambiguity: The most difficult decision situation is the state of ambiguity, in which the decision problems are not at all clear. The alternative courses of action are difficult to identify, and the information about consequences is not available. In this state, nothing is known for sure and the risk of failure is quite high.