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Chapter 1 Class 6 Economics - Introduction to Economics

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  • We study economics to learn how to make rational decisions that maximize our well-being and minimize our costs.

    • For example, a consumer has to decide how to allocate his income among different goods and services that he wants to buy. He has to compare the prices and utilities of each option and choose the one that gives him the highest satisfaction within his budget constraint.

    • Similarly, a producer has to decide how much output to produce and what combination of inputs to use. He has to compare the costs and revenues of each option and choose the one that gives him the highest profit within his resource constraint.

  • We study economics to evaluate the costs and benefits of different alternatives and trade-offs that we face in our daily lives.

    • For example, a student has to decide whether to study more or play more. He has to weigh the benefits of getting higher grades or having more fun against the costs of sacrificing leisure time or academic performance.

    • Similarly, a government has to decide whether to spend more on education or health. It has to weigh the benefits of improving human capital or reducing disease against the costs of raising taxes or borrowing money.

  • We study economics to appreciate the diversity and interdependence of economic systems and agents in the world.

    • For example, a farmer in India depends on the weather, the soil, the seeds, the labor, the market, etc. for his production and income. He also affects and is affected by other farmers, consumers, traders, etc. in his country and abroad.

    • Similarly, a country in Africa depends on its natural resources, its human resources, its technology, its trade partners, etc. for its economic growth and development. It also affects and is affected by other countries, organizations, institutions, etc. in the global economy.

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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 13 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.