ThePrismSolutions

ThePrismSolutions

Basic concept of economics

INTRODUCTION:-

Every subject irrespective if is science or an art subject, has its own set of concepts. These concepts are freely used in any discussion of the subject, without necessarily repeating the definition of the concepts every time they are used. It is taken for granted that everybody understands what these concepts mean .

HUMAN WANTS:-

"Human wants" are those things that people desire to have above what they truly need in order to live. Only a limited number of needs actually exists, but wants are virtually unlimited, restricted only by a person's imagination "
But in economics, there is difference between a 'desire' and a 'want'. Every desire cannot be a want. If a poor person desires to have a car, his desire cannot be called a want. A desire can become a want only when a consumer has the means (i.e. money) to purchase the thing and he is also ready to spend the means (money).
For a desire to become a want, the following four elements must be present.
1. The desire for a thing.
2. Efforts to satisfy the desire.
3. The means (i.e. money) to purchase the thing.
4. Readiness to spend the means (i.e. money) to satisfy the desire.

These four essential elements constitute a want. Suppose, Bhanu desires to possess a car, for this, he should make efforts and earn money to purchase it. He should also be ready to spend the money to purchase it. If all these four elements are present, only then Bhanu's desire to have a car can become his want. In the words of Penson, " Want is that effective desire for a particular thing which expresses itself in the effort or sacrifice necessary to obtain it."

Characteristics of Human Wants:-

Human wants have certain characteristics or features, which can be explained as below.

1. Wants are Unlimited:

Man is a bundle of wants and his wants are numerous. Man remains busy throughout his life in order to satisfy these wants. When one want is satisfied, another want crops up. In this way, wants arise one after another. The second want arises after the satisfaction of the first want, the third after the second and so on. This endless circle of wants continues throughout human life. Thus wants are unlimited.

2. Each Particular Want can be satisfied:

We cannot satisfy all our wants because the means to satisfy them are limited. But a person can satisfy a particular want. For example, hunger can be satisfied by taking food. He may take one, two, three or more pieces of bread. Ultimately, he will say that he does not want more bread.

3. Wants are Competitive:

We can satisfy only a few wants and not all wants because our means are limited. Therefore, we always have to make a relative comparison of the intensity of our different wants. Only that want is satisfied first which is the most urgent. For example, suppose, a student has Rs. 20 with him. With this amount he can purchase either a copy or see a picture. Now there will arise a competition between his want for a copy and for a picture. If his intensity for the copy is more intense, he will purchase the copy, instead of seeing the picture. In this way, there is always a competition among our various wants.

4. Wants are Complementary:

Wants are competitive but a few wants are complementary to each other. To satisfy one want for a good, we have to arrange for another good also. For example, the want for a car can be satisfied only when we fulfill the want for petrol also. Such wants are called complementary.

5. Some Wants are both Competitive and Complementary:

Certain wants are competitive as well as complementary to each other. For instance, labourers are required to operate machines. Therefore, the demand for labour is a complementary want for machines. But, at the same time, machines can be used in place of labour for the production of goods. Here, machines reduce the want for labour and thus wants for machine and labour are also competitive to each other.

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