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Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy : Karnatak University (Kannada: ಕರ್ನಾಟಕ ವಿಶ್ವವಿದ್ಯಾಲಯ) is a state university located in the city of Dharwad in the state of Karnataka in India. It was established in October 1949, and officially inaugurated in March 1950. The campus spans 750 acres (3 km²). D. C. Pavate was the first official vice-chancellor from 1954 to 1967. The rapid development of the institution is credited to him.

The university was recognized with the “Potential for Excellence” by the University Grants Commission. The university is the second oldest university in the state of Karnataka after the University of Mysore. The Karnatak university once used to serve most of the Karnataka region including Dharwad, Belagavi, Uttara Kannada, Bijapur, Gulbarga, Raichur, Bidar and Bellary. until the 1980s (Manipal Institute of Technology and the Kasturba Medical College of Manipal were affiliated with Karnatak University at Dharwad and all degrees were awarded by Karnatak University in between the years from 1953 to 1965)

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy : Economics is a social science concerned with the production, distribution and consumption of goods and services. It studies how individuals, businesses, governments and nations make choices on allocating resources to satisfy their wants and needs, and tries to determine how these groups should organize and coordinate efforts to achieve maximum output.

Economic analysis often progresses through deductive processes, much like mathematical logic, where the implications of specific human activities are considered in a “means-ends” framework.

Economics can generally be broken down into macroeconomics, which concentrates on the behavior of the aggregate economy, and microeconomics, which focuses on individual consumers.

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy : Here we are presenting you all “Some Important Karnataka Class 12 Commerce Economics Basic Problems Of An Economy ” . Download here Karnataka Class 12 Commerce Economics Basic Problems Of An Economy complete details in PDF Format.

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy : Each of us must have an understanding on how the economy works. It will allow us to see if our policy makers are making the right economic decisions for us. We should be able to know how our behavior and spending habits affect the economy.It is important therefore to know what economics is and learn about its different features and dimensions.

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy : All modern economies have certain fundamental or basic economic problems to deal with. In every single economy, including the so-called “affluent society”, resources are limited. As a result, decisions regarding the resource use have to be made together by individuals, by business corporations, and by society. It is the social choice and community preferences which give substance to the question of macro-economic decisions.

Download here Karnataka Class 12 Commerce Economics Basic Problems Of An Economy complete details in PDF Format.

Three Basic Economic Problems of Society

Following figure shows the 3 fundamental economic problems faced by all societies worldwide.

Three Basic Economic Problems

1. What to produce ?

Each and every economy must determine what products and services, and what volume of each, to produce. In some way, these kinds of decisions should be coordinated in every society. In a few, the govt decides. In others, consumers and producers decisions act together to find out what the society’s scarce resources will be utilized for. In a market economy, this ‘what to produce?’ choice is made mainly by buyers, acting in their own interests to fulfill their needs. Their demands are fulfilled by organizations looking for profits.

For instance, if cellphones are in demand it will pay businesses to produce and sell these. If no one desires to buy radio sets, it is not worth producing them.

In case a manufacturer produces an item which buyers don’t buy in much quantity, there will likely be inadequate income. The manufacturer will have to enhance the quality and modify the product to match buyer tastes. If the item is still not preferred, the producer will most likely halt the production. In this manner, buyers get the goods they need.

Customers rule the ‘what?’ decision. They ‘vote’ for certain products and services by spending money on those they like. Each and every manufacturer has to offer what buyers want so that they can compete effectively against other manufacturers. Government authorities also perform some part in making ‘what?’ decisions. For example, a law demanding all ladies to wear a helmet generates demand for helmets, and profit-seeking businesses will produce them.

2. How to produce ?

This basic economic problem is with regards to the mix of resources to use to create each good and service. These types of decisions are generally made by companies which attempt to create their products at lowest cost. By way of example, banking institutions have substituted the majority of their counter service individuals with automatic teller machines, phone banking and Net banking. These electronic ways of moving money, utilizing capital as opposed to labour resources, have decreased the banks’ production costs.

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy :  In the Nineteen fifties dams were being constructed in China by countless people making use of containers and shovels. On the other hand dams were being constructed in the united states by using huge earth moving devices.

The initial approach to production, using a resource combination which includes a small capital and much labour, is labour-intensive while the second, utilizing a little labour and a lot of capital, is capital-intensive. Each one of these ‘how’ decisions was made based on lowest cost and accessible modern technology.

3. For whom to produce ?

This basic economic question is focused on who receives what share of the products and services which the economy produces. The portion of production which each person and family can consume is determined by their income. Income is distributed in line with the value of resources we have to sell.

As an example, a top cricket player will earn far more income than a professor. A top cricket player has a resource to sell for which many people will pay a high price. Professors are not so rare, and few people pay for their services.

The for whom decision can even be dependent upon skills shortages, in which case organizations will provide higher incomes to attract workers with rare skills. In the same way, high wages may be required to attract employees to rural locations.

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy : The economic problem is at times referred to as the basic, central or fundamental economic problem. It is one of the crucial economic theories in the functioning of any economy in this world. Due to scarcity, choices have to be made by consumers, businesses and governments.

Scarcity can be caused by the possible lack of availability in resources, from individuals insatiable desires, or from a combination of the two. Due to the fact that resources are scarce and many of our desires are substantial, a choice needs to be made about how to use scarce resources in the most effective way.

This rule is applicable to companies, society as a whole, and to individuals. This article has discussed the 3 fundamental economic questions or three basic economic problems common to all societies. If anything is missing please post in the comments section.

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy : Every economic system faces basic economic problems relating to production, distribution and consumption in the society. The problem of ‘what to produce’, is more important in less developed economy, as they do not have skilled man power. ‘How to produce’ is another problem,as availability of resources are different in each economy. Hence it is important to adopt technology in production

The problems depend on the economic status of the country.Another problem is ‘for whom to produce’, it depends on the socio-economic ideology. ‘How much to produce’ is another problem which depends on the Production, Potential and Size of the market. The problem of ‘by whom to produce’ is also very big . A Socialist Economy aims at social control over productive activities; a Capitalist Economy gives occupational freedom, the Mixed Economy is the combination of both Capitalist and Socialist economy. The last problem is that ‘how besthe resources are being used’. The available resources should be allocated, to get maximum total output

Karnataka Class 12 Commerce Economics Basic Problems Of An Economy Notes

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