ECONOMY?

What is

Economy?

Substitution

of Raw

Material

What is it’s

Importance

for a Country?

ECONOMY• Economics is the study of the method of

allocating scarce physical and human means (resources) among unlimited wants or competing ends.

• In other words economics is the study of scarcity, which results when people want more than can be produced.

• Economics has become fundamentally the science of decision making.

Parts of Economi

cs

Micro Economi

cs

Macro Economi

cs

Full Employment Price Stability

Economic Growth An Equitable

Distribution of Income

Goals For Economic

Some Concepts For Economy Analysis

PHYSICAL AND ECONOMIC LAWSECONOMIC DEALS WITH THE ACTIONS OF PEOPLECONSUMER AND PRODUCER GOODsVALUE AND UTILITYTHE ECONOMY OF EXCHANGETHE PRICE IS DETERMINED BY SUPPLY AND DEMANTHE LAW OF DIMINUTION RETURNSTHE RELATION OF OBJECTIVE AND PERFORMANCE TO SUCCESSMAJOR AND SUBORDINATE OBJECTIVESTHE ECONOMY OF INITIATIVEPRE-PLANNING AND ECONOMYFEEDBACK AND IMPROVED ACTIONADVANTAGES AND DISADVANTAGESTHE THRESHOLD IDEA

Physical and Economic Laws With the physical environment the engineer

has a body of physical laws upon which to base his reasoning.

Boyle’s laws, Ohm’s law Newton’s law of motion They are supplemented by many formulas

and known facts, all of which enable the engineer to come to conclusions about the physical environment that match the facts within narrow limits.

Economic laws, therefore can no more

exact than the description of the behavior of people acting singly and collectively.

But the engineering process is concerned with the economic as well as the physical environment.

Economic Deals With The Actions Of People

Economics deals with the behavior of people individually and collectively, particularly as their behavior relates to the satisfaction of their wants.

The wants of people are motivated largely by emotional drives and tensions and to a lesser extent by logical reasoning processes.

A part of human wants can be satisfied by

physical goods and services such as ↘ Food↘ Clothing↘ Shelter↘ Transportation Communication↘ Entertainment↘ Medical Care↘ Educational↘ Opportunities↘ Personal Services but man is rarely satisfied by physical things

alone.

Consumer And Producer Goods Two Classis For Economists

Consumer Goods

• Consumer goods are products and services that directly satisfied human wants. Examples of consumer goods are

• Television Set• House• Shoes• Orchestra• Health Services.

Producer Goods

• Producer goods are, in the long run, used as a means to an end; namely, that of producing goods and services for human consumptions.

• Examples Of This Class Of Goods Are• Lathes• Bulldozers• Ships• Railroad Cars.

Value And Utility

Value

The term value, like most other widely used terms, has a variety of meanings.

In economics, value designates the worth that a person attaches to an object or a service.

The value of an object is not inherent in the object but in inherent in regard that a person or people have for it.

Utility The general economic meaning of the

term utility is the power to satisfy human wants.

The utility that an object has for an individual is determined by him, thus the utility of an object, like its value, is not inherent has for it.

The Economy Of Exchange Economy of exchange occurs when

utilities are exchanged by two or more people.

In this connection, a utility means anything that a person may receive in an exchange that has any value what–so ever to him; for example, lather, a dozen pencils a meal, music, or a friendly gesture.

The Price Is Determined By Supply And Demand

In a free enterprise system, the price of goods and services is ultimately determined by supply and demand.

The supply curve shows the relationship between the quantity of a product that vendors will offer for sale and the price of

the product.

The Elasticity Of Demand Consumer goods and

services may be classified as being either necessities or luxuries.

The classification is relative

The classification depends upon the individual’s economic and social position.

This relationship is illustrated in fig given as

The Law Of Diminution Returns The term law of diminishing return was

originally used to designate the relation of input of fertilizers to land and the output of crops.

“The amount of product obtained in a productive process varies with the agents of production are combined. Of only one agent is varied, the product per unit of this agent may increase to a maximum amount, after which the product per unit may be expected to diminish but not necessarily proportionately.”

The Relation Of Objective And Performance To Success

Attention may be focused on doing very worth-while things or on doing things well.

Economic success depends to an extent on each and therefore an optimum balance should be sought.

All too often the effort of each is not given consideration separately in contemplating understandings.

Pre-planning And Economy Pre-planning is the formulation, prior to

beginning an undertaking, of more or less detailed plans for carrying it out.

One important economy of this practice is that it permits specialization.

Feedback And Improved Action Feedback for the purpose of improving

future is an essential of the decision-making process.

A great deal of time and energy is spent. A great deal of time and energy is spent

in acquiring information about an understanding that has been completed.

Advantages And Disadvantages Any contemplated action has its advantages and

disadvantages. The sponsor of a proposal should school himself

to consider advantages and disadvantages as impersonally as possible, because the economic advantage of a proposal depends upon its advantages and disadvantages in comparison with those of other alternatives.

The Threshold Idea There are degrees of action in a great many fields

below which the effect of the action Is insignificant. The threshold of success varies greatly for different

activities. The threshold idea should be taken into

consideration in evaluation engineering alternatives.

Raw Material substitutes What exactly is substitution?

The most obvious and simple example of substitution is the direct replacement of a material for another in a given application or process.

Example An example that everyone would have noticed

would be the use of plastic instead of glass for drinks bottles.

In the chemical industry, growing evidence of the toxicity of certain solvents e.g. benzene has driven a move to the use of more benign solvents e.g. toluene.

What is Raw Material? The raw materials are the basic materials from

which goods and products are made. Usually, raw materials are natural resources – for example oil, iron and wood are all common raw materials used in the production of goods and products.

Subcategories types for raw material

Direct raw materials are those which will be directly incorporated into the final product.

e.g. the wood used to build a table.

Direct Material

s

Indirect materials on the other hand are those which are consumed during the production process.

e.g. the lubricant, rags, light bulbs.

Indirect Material

s

Why raw material is substituted? There are a number of reasons why you

might want to find a replacement for a raw material you currently using.

It could be because the supplier can’t get you the ingredient.

You can save money on your formula. The product is no longer stable. For marketing reasons you want to change.  

Steps for the substitution of raw materialUnderstand

what the ingredient does in the formula Find

potential replacements

Create prototypes

Test prototype functionality

Test prototype stability

The US EconomyEducation

Households and Consumption

Production

Government

Trade

The Economic Problems

What is an Economic Problem? In a broad sense, an economic problem can be

defined as an abnormal and irrational or irrelevant behavior by socio-economic units and

market components. market components signify 3 major constituents

of the market;

Demand Supply Price

Problems Meaning Scarcity Inflation Economic Bubble Recession List of Economic Challenges

List of Economic Challenges Anti-competitive

behavior, laws, and practices

Mass bankruptcy filings and insolvency

Economic bubbles and mass business failure

Child labor and improper child welfare development

Commercial crimes and intentional or planned corporate offenses

Corporate crime and planned economic turmoil

Corporate scandals Corruption Uncontrolled debt Financial disasters Government or

bureaucracy induced crisis

Mass economic inequality

Energy crisis Ethically disputed

business practices Financial crises

(restricted to the financial sector)

Uneven income distribution

Inflation

Market failure (component failure)

Monetary hegemony Monopoly Off shoring and

outsourcing Poverty Recessions Social inequality Stock market

crashes Unemployment Asset price inflation Economic collapse Economic mobility Economic stagnation Expenditure

cascades

Done