Engineering Economics And Management

Basic Economics’ Problems

• Introduction• Types of Economics’ Problems• Meaning & remedies of listed types

Problems related to economy are termed as “Economic problem”.

• Economic problem is an integration of four parts: 1. Problem of allocation of resources2. Problem of full- utilization of resources3. Problem of economical efficiency 4. Problem of economical growth

Introduction

Different types of Basic economics problems are as follow :1. Poverty 2. Unemployment3. Inflation

• As per the United Nations, “Poverty is fundamentally a denial of choices and opportunities, and a violation of human dignity. It means lack of basic capacity to participate effectively in society. It means not having enough to feed and clothe a family, not having a school or clinic to go to, not having the land on which to grow one’s food or a job to earn one’s living, not having access to credit. It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, and it often implies living on marginal or fragile environments, without access to clean water or sanitation”.

• Poverty is general scarcity or death ,or the state of one who lacks a certain amount of material possessions or money.

Poverty

• To measure the poverty , a central indicator in income and consumption is defined , which is known as the poverty line.

• It is critical value below which an individual or household is determined to the poor.

• In India, the Minimum Calories intake of a Person has been put at 2,400 in Rural Area & 2,100 in Urban Areas.

• To convert this Calorie intake based Poverty Line into a Monetary Measure of Poverty, the Cost of Minimum Consumption Requirements of Food providing the minimum calories is calculated at prevailing Price.

• Thus, Government defined a Person with an Income of Less than Rs.368 (Rural) & Rs.559 (Urban) per month as living below Poverty Line.

Poverty line

• Almost half of the world – over 3 billion people – live on less than $2.50 a day.

• According to UNICEF, 22,000 children die each day due to poverty.

• Nearly a billion people entered the 21st century unable to read a book or sign their names.

• Less than one per cent of what the world spent every year on weapons was needed to put every child into school by the year 2000 and yet it didn’t happen.

Statistical Facts On Poverty

Relative Poverty• Relative Poverty refers to the

Income or Asset Position of one Class or Group of People in comparison with the other Classes or Groups, or of one Individual vis a vis the Others.‐ ‐

• The essential point here is that Poverty of One is Relative to the Richness of the other.

• For Example, an Average Middle Class Person is Poor when compared to the Upper Middle Class Person, who in turn, may be poorer than the Richer Person and so on.

Absolute Poverty• Absolute poverty refers to a

condition where a person does not have the minimum amount of income needed to meet the minimum requirements for one or more basic living needs over an extended period of time.

• It not only depends on income but also depends on services which are needed.

• For Example , People below poverty line are facing absolute poverty and do not have enough money to buy which is needed for survival.

1. Unemployment2. Corruption3. High population growth4. Inflation5. Land inequality and social justice6. Less priority to agriculture sector by Government7. Neglecting the poor once8. Lack of decent housing9. Health among the main cause of poverty in India

Causes Of Poverty

1. Employment opportunities2. Uplift of agriculture3. Education4. Establishment of Small Scale Industries5. Reduce Inflation6. Proper Utilization Of Resources7. Check Population Growth

Measures to Reduce Poverty