Study of Economics in Nepal

Concept and Types of Cost Concept of Cost of Production Cost is related to the financial aspect of production that paid to the services of resources of production (inputs) on the basis of their marginal productivity. Cost of production refers to all the expenditure of a firm on the factor's inputs (L d , L b , C, org.) as well as non-factor inputs (raw material, fuel, electricity, depreciation, advertisement, insurance, tax, travelling & transportation) for the production of a commodity in terms of wages, salary, interest, profit, rent, prices for non-factor inputs.

  Very Short Questions 1.      What are the main causes of economic problem? 2.      Why the problems of scarcity arise? 3.      What factors lead to the divergence of market prices from natural prices? 4.      If there is no scarcity of resources, then economics will be ceased to exist. Do you agree with the statement? 5.      What is the difference between shortage and scarcity? 6.      State true or false and justify your answer: shortages are man-made. 7.      How do you solve the economic problem? 8.      What do you mean by scarcity of resources? 9.      Suppose the market is defined by Demand: Q = 154 – 2P , Supply: Q = 2 + 2P at a price of P = 16, what is the size of the shortage that will exist in the market? 10.   Load-shedding is the outcome of shortage of hydroelectricity. Do you agree? 11.   What is opportunity cost? 12.   Give any example of opportunity cost. 13.   What term describes the value of resources if used in their next best available us

  1.1 Concepts of Scarcity and Choice  Scarcity means shortage. Every society has limited economic resources like land, capital, labor and entrepreneurship, which are required for the production of goods and services. Thus, every society can produce only limited goods and services. But human wants are unlimited. As soon as one want is fulfilled, another want immediately appears. It never ends. It is not possible to satisfy all wants with limited means.   Human beings are confronted with the problem of making choices, which wants are to be fulfilled, and what means are to be allocated among the competing wants. To solve the problem of unlimited wants and limited means, people have to make choice and it is the central problem of every society.   If economic means are free and unlimited, there would not be problems. People need not worry about budgeting their income.

  Eco 304         Credit Hours: 5                                                                              Teaching Hours: 160 Course Contents

Equilibrium Condition of Firm & Industry Under PCM The main objective of a firm under PCM is to maximize the profit. The profit maximization condition of the firm is also called equilibrium condition of a firm.

Concept of Market & Market Structure 'Market' refers to the existence of direct or indirect contact between the seller and buyers for buying and selling of a commodity at a given price. 'Market Structure' refers to the selling environment in which a firm produces & sells its products. It is basically defined by following features: number of buyer and seller of the product, type of the product bought (product differential) & sold, degree of mobility of resources, market information, market entry conditions and the extent to which the actions of firm will affect another firm.

  Exercise - Money

Introduction In the old days, human life was not as complex as it is today. People were self-dependent because there were a few basic needs to satisfy such as food, clothes, and shelter. With the passage of time and modernization, human wants multiplied.  As a result, self-sufficiency came to an end and the process of exchange started, under which people exchanged their commodities for other required commodities. This system is called barter system and the economy is called barter economy. After a long time, because of various difficulties of barter system, money emerged as a medium to make exchange easy or avoid the difficulties of barter system.

Exercise - National Income Accounting

 Concept of National Income Accounting The national income accounting was first introduced in England in 1676. It was based on the book "Political Arithmetic" written by William Petty. It was continuously developed in  18 th and 19 th  century. By   20 th  century, it was properly developed. After the Second World War "Simon Kuznets" developed national income systematically. National income accounting is defined as the method or technique used in construction of national income accounts. 

 Exercise - Theory of Production

Concept of Production Technological transformation of input (factor input: land labor, capital, organization & non-factor input: water, electricity, raw materials) into output (finished goods & services) is known as production. In other words, production is the process of making goods to satisfy human wants. Production is also relating to the process of creating or improving utility or creation of exchange value. 

  Exercise - Theory of Consumer Behavior

  Introduction Consumer:   A consumer is a person who purchases goods and services for the satisfaction of wants. Aim of the consumer:   To obtain maximum satisfaction of wants from spending limited money income on various goods and services.

Exercise - Elasticity and Its Measurement

Concept of Demand and Demand Function

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