Needs and social production of economic goods. Abstract: Economic needs, benefits and resources, essence and classification. Economic and natural benefits

Needs and resources

As follows from previous topics, modern economy is the science of rational distribution of society's limited resources to meet people's needs. In this topic we will analyze the needs of people and ways to satisfy them, the target function economic activity people, consider what resources are needed to produce economic goods, what limited resources mean and what consequences it leads to, the problem of choice and the main issues of any economic system.

Main questions of the topic:

Question 1. Economic needs and benefits.

Question 2. Production and factors of production.

Question 3. Production capabilities.

Question 4. The problem of choice and economic systems.

Economic needs and benefits

Needs is an expression of the need for something necessary to maintain life and develop the individual and society as a whole. It is needs that motivate people to production and economic activity.

Needs are formed under the influence of numerous factors. Needs are influenced by the biological nature of a person, his spiritual world, the socio-economic conditions of his life, scientific and technical progress, natural and climatic environment, etc.

There are many options for grouping and classifying needs. Needs can be identified:

− primary(the need for means of subsistence that cannot be replaced by anything - food, clothing, housing) and secondary(needs of choice - cars, entertainment, travel);

− material(in food) and spiritual(in reading books);

− personal(education) and public(country's defense capability, security environment).

When characterizing needs and assigning them to one group or another, one must keep in mind the conditional (relative) nature of one group or another. The boundaries between types of needs are quite fluid.

For example, in highly developed countries the need for the ability to read and write is one of the primary needs, and in backward countries– to secondary needs.

The classification of needs developed by the American scientist A. Maslow is widely known. In the system he proposed, all needs are presented in the form of a pyramid, at the base of which are physiological needs. Above them rise the spiritual needs of a person (Fig. 3.1 A. Maslow’s Pyramid of Needs).

According to A. Maslow, the first two lower groups of needs are lower-order needs, and until they are satisfied, higher-order needs are irrelevant (three upper groups of needs).

As society develops, people's needs constantly expand and become more complex, while the share of spiritual and intellectual needs increases.

Increasing needs create a constant incentive for productive work.

People's needs are satisfied with the help of goods.

Good- This is everything that has utility for a person and satisfies his needs. Benefits can have a material form (material object) or act as a service. A service is an intangible benefit that takes the form of an activity useful to people. Services cannot be accumulated, since the processes of their creation and consumption coincide.

All goods with the help of which a person satisfies his needs are divided into limitless- free benefits of nature and limited (economic), most of which are created during the production process.

Economic benefits limited- it means that:

- they are not enough to satisfy everyone people's needs;

– the volume of goods can be increased only by spending factors of production;

- benefits have to be distributed in one way or another.

Economic benefits are divided into two large groups:

− consumer goods, directly satisfying people’s needs (food, clothing, housing, etc.);

− means of production– goods of a production nature that satisfy people’s needs indirectly (machines, machines, equipment, minerals).

Many economic benefits are interconnected: they can either replace each other or complement each other. In this regard, they distinguish:

− fungible goods(substitute goods) - goods that have the ability to satisfy needs at the expense of each other (oil - gas, margarine - oil, wood - brick, etc.) In this case, interchangeability can be complete (absolute), when one good can completely replace other (ballpoint - capillary pen; candy - sugar - jam, etc.), and relative, when goods can be equated to each other to a greater or lesser extent (natural and artificial fabrics, roses and carnations, gasoline or fuel oil);

− complementary(complimentary) benefits– goods that satisfy people’s needs only in combination with each other (tape recorder and cassette, camera and film, car and gasoline, etc.). Complementarity can be rigid (absolute) and relative. In the first case, one good must correspond to a certain amount of another good (tape recorder - cassette), in the second, such strict certainty is absent (coffee and sugar, shirt and tie).

Understanding the complementarity and interchangeability of goods is of great importance for analyzing the behavior of business entities and pricing patterns in a market economy.

Self-test questions

1. What is a need? What influences the formation of needs?

How can you group needs?

2. Analyze A. Maslow’s pyramid of needs.

3. How do needs develop?

4. What are benefits? What goods are economic? How can they be

All people have different needs. They can be divided into two parts: spiritual and material needs. Although this division is conditional (so, it is difficult to say whether a person’s need for knowledge belongs to spiritual or material needs), however, for the most part it is possible.

The concept of economic needs and benefits

Material needs can be called economic needs. They are expressed in the fact that we want various economic benefits. In turn, economic benefits are material and intangible objects, or more precisely, the properties of these objects that can satisfy economic needs. Economic needs are one of the fundamental categories in economic theory.

At the dawn of mankind, people satisfied their economic needs using the ready-made benefits of nature. Subsequently, the absolute majority of needs began to be satisfied through the production of goods. IN market economy, where economic goods are bought and sold, they are called goods and services (often simply goods, products, products).

Humanity is structured in such a way that its economic needs usually exceed the ability to produce goods. They even talk about the law (principle) of increasing needs, which means that needs grow faster than the production of goods. This is largely because as we satisfy some needs, others immediately arise.

So, in traditional society the majority of its members have needs primarily for essential products. These are needs mainly for food, clothing, housing, and basic services. However, back in the 19th century. Prussian statistician Ernest Engel proved that there is a direct connection between the type of goods and services purchased and the income level of consumers. According to his statements, confirmed by practice, with an increase in the absolute amount of income, the share spent on essential goods and services decreases, and the share of expenses on less necessary products increases. The very first need, and a daily one at that, is the need for food. That's why Engel's law finds expression in the fact that as income increases, the share of income spent on food purchases decreases, and the portion of income that is spent on the purchase of other goods (especially services) increases. non-essential products.

Ultimately, we come to the conclusion that if the growth of economic needs constantly outstrips the production of economic goods, then these needs are completely insatiable and limitless.

Another conclusion is that economic benefits are limited (rare, in the terminology of economic theory), i.e. there is less need for them. This limitation is due to the fact that the production of economic goods faces limited supplies of many natural resources, frequent shortage work force(especially qualified), insufficient production capacity and finances, cases of poor organization of production, lack of technology and other knowledge to produce a particular good. In other words, the production of economic goods lags behind economic needs due to limited economic resources.

The economic life of society is based on the need to satisfy people's needs for various economic goods. In turn, these benefits are produced on the basis of economic resources that are at the disposal of society and its members.

All people have different needs. They can be divided into two parts:

1) spiritual needs;

2) material needs.

Material needs are called economic needs . They are expressed in the fact that a person strives for various economic benefits.

In its turn, economic benefits - these are tangible and intangible items that can satisfy economic needs. Economic needs are the main category in economic theory.

At the dawn of mankind, people satisfied their economic needs using the ready-made benefits of nature. Subsequently, the absolute majority of needs began to be satisfied through the production of goods. In a market economy, where economic goods are bought and sold, they are called goods and services.

Humanity is structured in such a way that its economic needs usually exceed the ability to produce goods. This is largely due to the fact that as some needs are satisfied, a person immediately develops others.

In a traditional society, the needs are primarily for essential products . These include food, clothing, housing, and basic services. Back in the 19th century. Prussian statistician Ernest Engel proved that there is a direct connection between the type of goods and services purchased and the income level of consumers. According to his statements, confirmed by practice, with an increase in the absolute amount of income, the share spent on essential goods and services decreases, and the share of expenses on less necessary products increases.

The very first need, and a daily one at that, is the need for food. That's why Engel's law tells us that as income grows, the share of income spent on purchasing food decreases, and the portion of income that is spent on purchasing services increases. non-essential products .

Economic benefits in the world are limited.

This limitation is due to the fact that the production of economic goods faces:

1) limited reserves of many natural resources;

2) frequent shortages of labor (especially qualified ones);

3) insufficient production capacity and finances;

4) poor organization of production;

5) lack of technology and other knowledge to produce a particular good.

Currently, the production of economic goods lags behind economic needs due to limited economic resources.

Economic resources refer to all types of resources used in the production of goods and services. Therefore, they are often called production resources, production factors or factors of production. The remaining goods are called consumer goods.

Economic resources include:

Natural resources (land, subsoil, water, forest and biological, climatic and recreational resources), abbreviated as land;

Labor resources (people with their ability to produce goods and services), abbreviated as labor;

Knowledge necessary for economic life (developed primarily by science and disseminated mainly through education).

The combination of two situations typical of economic life - limitless needs and limited resources - forms the basis of the entire economy.

However, only the contradiction between the limitlessness of needs and the limited resources forms the axis around which all economic life revolves, and the core of economics as a science. Therefore, the household, the company, and the entire national economy you have to constantly make a choice on the purchase or production of what goods you should spend your resources, which are almost always limited.

All economic resources are intertwined.

Economic resources are mobile, i.e. mobile, as they can move in space (within the country, between countries), although the degree of their mobility is different. The least mobile are natural resources, the mobility of many of which is close to zero (land is difficult to move from one place to another.). Labor resources are more mobile, as can be seen from the internal and external migration of labor in the world.

Entrepreneurial abilities are even more mobile, although often they do not move on their own, but together with labor resources or capital. The most mobile resources are capital, especially money, and knowledge. The intertwining of resources and their mobility also reflect their other property - interchangeability, i.e. alternative.

For example, if a farmer needs to increase grain production, he can do it like this:

1) expand the sown area, i.e. use additional natural resources;

2) hire additional workers, i.e. increase the use of labor;

3) expand your fleet of equipment and equipment, i.e. increase your capital;

4) improve the organization of labor on the farm, i.e. use your entrepreneurial skills more widely;

5) use new types of seeds, i.e. apply new knowledge.

The farmer has this choice because economic resources are interchangeable (alternative).

All of the above indicators are cost-based, i.e. measured in money. If we measure them in physical quantities, then these will be indicators not of economic, but of technological efficiency.

Economic needs and benefits

The concept of economic needs and benefits

Material needs can be called economic needs. They are expressed in the fact that we want various economic benefits. In its turn, economic benefits - these are material and intangible objects, or more precisely, the properties of these objects that can satisfy economic needs. Economic needs are one of the fundamental categories in economic theory.

At the dawn of mankind, people satisfied their economic needs using the ready-made benefits of nature. Subsequently, the absolute majority of needs began to be satisfied through the production of goods. In a market economy, where economic goods are bought and sold, they are called goods and services (often simply goods, products, products).

Thus, in a traditional society, the majority of its members have needs primarily for essential products. These are needs mainly for food, clothing, housing, and basic services. However, back in the 19th century. Prussian statistician Ernest Engel proved that there is a direct connection between the type of goods and services purchased and the income level of consumers. According to his statements, confirmed by practice, with an increase in the absolute amount of income, the share spent on essential goods and services decreases, and the share of expenses on less necessary products increases. The very first need, and a daily one at that, is the need for food. That's why Engel's law finds expression in the fact that as income increases, the share of income spent on food purchases decreases, and the portion of income that is spent on the purchase of other goods (especially services) increases. non-essential products. The totality of all products produced to satisfy material wealth is called products.

Ultimately, we come to the conclusion that if the growth of economic needs constantly outstrips the production of economic goods, then these needs are completely insatiable and limitless.

Another conclusion is that economic benefits are limited (rare, in the terminology of economic theory), i.e. there is less need for them. This limitation is due to the fact that the production of economic goods is faced with limited supplies of many natural resources, frequent shortages of labor (especially skilled labor), insufficient production capacity and finance, cases of poor organization of production, lack of technology and other knowledge to produce a particular good. In other words, the production of economic goods lags behind economic needs due to limited economic resources.

Economic benefits and their classification

It is good for people. is a means of satisfying human needs. It is for the sake of satisfying the specific needs of people for benefits that economic activity in any country. The classification of goods is very diverse. Let us note the most important of them from the point of view various criteria classifications.

Economic and non-economic benefits

From the point of view of the limited nature of goods in relation to our needs, we talk about economic goods.

Economic benefits- these are the results of economic activity that can be obtained in limited quantities compared to needs.

Economic benefits include two categories: goods and services.

But there are also goods that, compared to needs, are available in unlimited quantities (for example, air, water, sunlight). They are provided by nature without human effort. Such goods exist in nature “freely”, in unlimited quantities and are called non-economic or free.

And yet the main circle is satisfied not by free, but by economic benefits, i.e. those benefits whose volume:

insufficient to meet people's needs fully;
can only be increased through additional costs;
have to be distributed in one way or another.

Consumer and production goods

From the point of view of consumption of goods, they are divided into consumer And production Sometimes they are called commodities and means of production. Consumer goods are intended for immediate satisfaction human needs. These are the final goods and services that people need. Production goods are resources used in the production process (machines, mechanisms, machines, equipment, buildings, land, professional skills (qualifications).

Material and intangible benefits

From the point of view of material content, economic benefits are divided into material and intangible. Material goods you can touch it. These are things that can accumulate and be stored for a long time.

Based on the period of use, material goods of long-term, current and one-time use are distinguished.

Intangible benefits represented by services, as well as such living conditions as health, human abilities, business qualities, and professional skills. Unlike material goods, it is a specific product of labor, which basically does not acquire a material form and the value of which lies in the beneficial effect of living labor.

The beneficial effect of services does not exist separately from its production, which determines the fundamental difference between a service and a material product. Services cannot be accumulated, and the process of their production and consumption coincides in time. However, the results from the consumption of the services provided can also be material.

There are many types of services, which are divided into:

Communication services - transport, communication services.
Distribution - trade, sales, warehousing.
Business - financial, insurance services, auditing, leasing, marketing services.
Social - education, healthcare, art, culture, social security.
Public - services of public authorities (ensuring stability in society) and others.

Private and public goods

Depending on the nature of consumption, economic benefits are divided into private and public.

Private good provided to the consumer taking into account his individual demand. Such a good is divisible, it belongs to the individual as private property, and can be inherited and exchanged. A private good is given to the one who paid for it.

Indivisible and belong to society.

Firstly, this is national defense, environmental protection, lawmaking, public transport and order, i.e. those benefits that are enjoyed by all citizens of the country without exception.

Interchangeable and complementary goods

Among the goods, there are also interchangeable and complementary goods.

Fungible goods are called substitutes. These goods satisfy the same need and replace each other in the process of consumption (white and black bread, meat and fish, etc.).

Complementary benefits or complements complement each other during consumption (car, gasoline).

With all this, economic benefits are divided into normal and inferior.

Towards normal benefits These are those goods whose consumption increases with the growth of the welfare (income) of consumers.

Inferior goods have the opposite pattern. As income increases, consumption decreases, and as income decreases, consumption increases (potatoes and bread).

Economic resources
Economic efficiency

The economic life of society is based on the need to satisfy people's needs for various economic goods. At the same time, these benefits are produced on the basis of economic resources that are at the disposal of society and its members.

Economic needs and benefits

All people have different needs. They can be divided into two parts: spiritual and material needs. Although the division is conditional (so, it is difficult to say whether a person’s need for knowledge belongs to spiritual or material needs), for the most part it is possible.

The concept of economic needs and benefits

Material needs can be called economic needs. It is worth noting that they are expressed in the fact that we want various economic benefits. At the same time, economic benefits are material and intangible objects, more precisely, the properties of these objects that can satisfy economic needs. Economic needs are one of the fundamental categories in economic theory.

At the dawn of mankind, people satisfied their economic needs using the ready-made benefits of nature. Subsequently, the absolute majority of needs began to be satisfied through the production of goods. In a market economy, where economic goods are bought and sold, they are called goods and services (often simply goods, products, products)

Humanity is structured in such a way that its economic needs usually exceed the ability to produce goods. They even talk about the law (principle) of increasing needs, which means that needs grow faster than the production of goods. In many ways, this happens because as we satisfy some needs, others immediately arise.

Thus, in a traditional society, the majority of its members have needs primarily for essential products. These are needs mainly for food, clothing, housing, and basic services. Moreover, back in the 19th century. Prussian statistician Ernest Engel proved that there is a direct connection between the type of goods and services purchased and the income level of consumers. According to his statements, confirmed by practice, with an increase in the absolute amount of income, the share spent on essential goods and services decreases, and the share of expenses on less necessary products increases. The very first need, and a daily one at that, is the need for food. Because Engel's law finds expression in the fact that as income grows, the share of income spent on food purchases decreases, and the portion of income that is spent on the purchase of other goods (especially services) increases. non-essential products.

Ultimately, we come to the conclusion that if the growth of economic needs constantly outstrips the production of economic goods, then these needs are completely insatiable and limitless.

Another conclusion is that economic benefits are limited (rare, in the terminology of economic theory), i.e. there is less need for them. This limitation is due to the fact that the production of economic goods is faced with limited supplies of many natural resources, frequent shortages of labor (especially skilled labor), insufficient production capacity and finance, cases of poor organization of production, lack of technology and other knowledge to produce a particular good. In other words, the production of economic goods lags behind economic needs due to limited economic resources.

Economic resources

Concept of economic resources

Economic resources refer to all types of resources used in the production of goods and services. In essence, these are those goods that can be used to produce other goods. That is why they are often called production resources, production factors, factors of production, factors of economic growth. At the same time, the remaining goods are called consumer goods.

Types of economic resources

Economic resources include:

natural resources (land, subsoil, water, forest and biological, climatic and recreational resources), abbreviated as land;
labor resources (people with their ability to produce goods and services), abbreviated as labor;
capital (in the form of money, i.e. money capital, or means of production, i.e. real capital);
entrepreneurial abilities (the ability of people to organize the production of goods and services), abbreviated as entrepreneurship;
knowledge necessary for economic life.

Even Aristotle, and after him medieval thinkers, considered labor one of the main economic resources. A similar approach was shared by the first economic school in the world - mercantilism. The Physiocratic school attributed particular importance to land as an economic resource. Adam Smith considered such economic resources as labor, land and capital. At the same time, the theory of three factors of production was most clearly formulated by the French economist Jean Baptiste Say (1767-1832). The English economist Alfred Marshall (1842-1924) proposed adding a fourth factor - entrepreneurial abilities. Many modern economists tend to believe that now in importance as a factor economic growth The factor of “knowledge” came first, calling it differently - technology, scientific and technological progress, science, information.

The limitlessness of needs and limited economic resources as the basis of economic theory.

As noted above, in life we often encounter the fact that economic resources are limited. It was also emphasized that economic needs are limitless.

This combination of two situations typical of economic life - limitless needs and limited resources - forms the basis of the entire economy, economic theory. In essence, it is the science that “studies how a society with limited, scarce resources decides what, how, and for whom to produce,” or, to put it another way, it “studies the problems of efficiently using or managing limited productive resources in order to achieving maximum satisfaction of human material needs" 2

2 Quote. by: McConnell K.R., Brew S.L. Economics / Transl. from English In 2 vols. M., 1992. T. 1. P. 18.

It is impossible to reduce modern economic theory only to this. At the same time, the contradiction between the limitlessness of needs and the limited resources forms the axis around which economic life revolves, and the core of economics as a science. A household, a company, the entire national economy has to constantly make a choice on the purchase or production of what goods should be spent and resources, which are almost always limited.

Interweaving, mobility and fungibility of economic resources

Resources are intertwined. For example, an economic resource such as knowledge is used when natural resources are sought to be consumed more rationally on the basis of new knowledge (scientific achievements). Knowledge will be an important element of such a resource as labor, when it is assessed from a qualitative point of view and attention is paid to the qualifications of workers, which depends primarily on the education (knowledge) they have received. Knowledge (primarily technological) ensures an increase in the level of use of equipment, i.e. real capital. Finally, they (especially management knowledge) allow entrepreneurs to organize the production of goods and services in the most rational way.

Economic resources are mobile (movable), as they can move in space (within a country, between countries), although the degree of their mobility varies. The least mobile are natural resources, the mobility of many of which is close to zero (land is difficult to move from one place to another, although it is possible). Labor resources are more mobile, as can be seen from the internal and external migration of labor in the world on a noticeable scale (see Chap. 36) Entrepreneurial abilities are even more mobile, although often they do not move on their own, but together with labor resources and/or capital (϶ᴛᴏ due to the fact that the carriers of entrepreneurial abilities will be either hired managers or capital owners) Most mobile the last two resources are capital (especially monetary) and knowledge.

The interweaving of resources and their mobility partly reflect their other property - interchangeability (alternativeness). If a farmer needs to increase grain production, he can do this: expand the acreage (use additional natural resources), or hire additional workers (increase the use of labor ), or expand the fleet of machinery and equipment (increase capital), or improve the organization of labor on the farm (make wider use of entrepreneurial abilities), or, finally, use new types of seeds (apply new knowledge) The farmer has a similar choice because economic resources are interchangeable (alternative)

Usually this interchangeability is not complete. For example, human resources cannot completely replace capital, otherwise workers will be left without equipment and inventory. Economic resources replace each other easily at first, but then become more and more difficult. So, with a constant number of tractors, you can increase the number of workers on the farm by requiring them to work in two shifts. At the same time, it will be very difficult to hire more workers and organize systematic work in three shifts, unless by sharply increasing their wages,

The entrepreneur (production organizer) constantly encounters and uses the indicated properties of economic resources. Indeed, given the limited availability of these resources, he is forced to find the most rational combination of them, using interchangeability.

Cobb-Douglas model

An illustration of the interweaving and alternativeness of economic resources can be a simple Cobb-Douglas model based on only two production factors (named after two American economists)

The concept of resource markets

In a market economy, each of the economic resources represents a large resource market - the labor market, the capital market, etc., consisting, in turn, of many markets for a specific resource. For example, the labor market consists of markets for workers of different specialties - economists, accountants, engineers, etc.

Production capabilities. Limit values

As already noted, economic goods are produced on the basis of economic resources. With limited (rarity) resources, it is necessary to determine exactly what goods to produce and what production capabilities there are for them.

The concept of production possibilities. Production possibility curve

Production capabilities are called the possibilities for the production of goods (product output). The need for constant choice of which resources and in what quantities to use for the production of goods is clearly demonstrated by a model called the “production possibilities curve.”

Table 2.1. Country's production capacity to produce cars and aircraft per year

Figure No. 2.1. Production possibility curve

Let's simply imagine that the country produces only two goods - cars and airplanes. If it concentrates all its economic resources on the production of cars only, it will be able to produce 10 million units per year. If it also needs to produce 1 thousand aircraft, then this is possible by reducing the production of cars to 9 million units. It is worth saying that for the production of 2 thousand aircraft it will be necessary to reduce the production of cars to 7 million units, and for the production of 3 thousand aircraft - to 4 million units. With the production of 4 thousand aircraft, the country is forced to abandon the production of cars altogether (Table 2.1 and Fig. 2.1)

Based on all of the above, we come to the conclusion that in order to increase aircraft production, we have to abandon more and more cars. We can say that the cost of manufactured aircraft is determined by the number of cars whose production must be abandoned.

Opportunity Cost

Opportunity cost is “what you have to give up in order to get what you want.”

"Quoted from: Mankiw N.G. Principles of Economics / Translated from English. St. Petersburg, 1999. P. 32.

It is not for nothing that opportunity cost is often called opportunity cost. So, in the example under consideration, the production of 4 thousand aircraft means a refusal to produce 10 million cars.

Of course, in real life, missed opportunities are not limited to one or even two types of products, the production of which has to be abandoned, they are numerous. Therefore, when determining opportunity cost, it is recommended to take into account the best of the lost real opportunities. So, when studying at a full-time university after school, a girl misses the opportunity to work during this period as a secretary (and not as a loader or watchman) and receive a reasonable salary. Wage secretary and will be for her the alternative cost (opportunity costs) of studying full-time at a university. Opportunity costs in Russia are often called opportunity costs, and opportunity costs are called imputed costs. Let us pay attention to the fact that as the production of a good increases, its opportunity cost increases. So, in our example, the production of 1 thousand aircraft requires the abandonment of the production of 1 million cars, 2 thousand aircraft - already 3 million cars, 3 thousand aircraft - 6 million cars, and for the production of 4 thousand aircraft it is necessary to abandon the production of cars altogether, those. For every additional thousand aircraft produced, more and more cars must be scrapped. We can say that the opportunity cost of the first thousand aircraft is equal to 1 million cars, and the opportunity cost of the fourth thousand aircraft is already 4 million cars. In other words, for each additional unit of a product produced, more and more of another, alternative product must be sacrificed. The reasons for the growth of opportunity costs lie primarily in the incomplete interchangeability of resources.

Law of increasing opportunity costs. Law of Diminishing Returns

The increase in opportunity costs as each additional unit of output is produced will be a known, tested and taken into account pattern in economic life. Therefore, this pattern is called the law of increasing opportunity costs. .

An even more well-known law, closely related to the above, is the law of diminishing returns (productivity). It can be formulated as follows: a continuous increase in the use of one resource in combination with a constant amount of other resources at a certain stage leads to a cessation of growth in returns from it, and then to its reduction. This law is again based on the incomplete interchangeability of resources. After all, replacing one of them with another (others) is possible up to a certain limit. For example, if four resources: land, labor, entrepreneurial abilities, knowledge - are left unchanged and a resource such as capital is increased (for example, the number of machines in a factory with a constant number of machine operators), then at a certain stage a limit comes, beyond which further the growth of this production factor becomes less and less. The productivity of a machine operator servicing an increasing number of machines decreases, the percentage of defects increases, machine downtime increases, etc.

Let's say that a farm grows wheat. An increase in the use of chemical fertilizers (with other factors remaining constant) leads to an increase in yield. Let's study ϶ᴛᴏ using an example (per 1 hectare):

We see that, starting with the fourth increase in the production factor, the increase in yield, although it continues, is in ever smaller amounts, and then stops altogether. In other words, the increase in one production factor, while others remain unchanged, at one stage or another begins to fade and ultimately goes to zero.

The law of diminishing returns can be interpreted in another way: the increase in each additional unit of production requires, from a certain point, an increasingly greater expenditure of economic resources. In our example, to increase the wheat yield by 1 centner, 0.2 bags of fertilizers are first required (after all, one bag is needed to increase the yield by 5 centners), then 0.143 and 0.1 bags. But then (with an increase in yield over 42 centners) an increase in fertilizer costs begins for each additional centner of wheat - 0.11; 0.143 and 0.25 bags. After this, an increase in fertilizer costs does not produce an increase in yield at all. In this interpretation, the law is called the law of increasing opportunity costs (increasing costs)

Limit (margin) values

The marginal (marginal, from the French marginal - located on the edge of something) value is understood as an increase in one value caused by an increase in another value by one (provided that all other values remain unchanged)

In the example with wheat, an increase in mineral fertilizers per unit (bag) gives a different yield increase. All given values of yield growth (5, 7, 10.9, 7.4 c) will be the limiting values, or more precisely, the limiting products of such a factor as mineral fertilizers. Let us once again pay attention to the fact that the value of the marginal product in ϲᴏᴏᴛʙᴇᴛϲᴛʙi with the law of diminishing returns from a certain moment begins to constantly decrease (although ϶ᴛᴏ often occurs from the very beginning)

The law of increasing costs demonstrates that as wheat yield increases, the cost of mineral fertilizers for the growth of each centner of wheat (they are called marginal costs) changes, and with a tendency to increase. We can conclude that in this case the income received from the use of each additional bag of fertilizer changes (reduces) - it is called marginal income.

Finally, limit values can be used not only by the manufacturer, but also by the consumer. For example, when assessing the usefulness of a particular good. The consumer proceeds primarily from the availability (rarity) of a particular good for him. If clean drinking water is rare for him, then he is ready to pay dearly for each liter of it (based on the money he has and his purchasing power) But as drinking water becomes more and more accessible to the consumer, he estimates its usefulness for himself to be less and less and is willing to pay much less for each liter. Thus, as the quantity of a good increases, its marginal utility decreases.

All special cases of the concept of marginal values (marginal analysis, marginalist theory, marginalism) It is widely used in economic theory and practice and is based on the constant correlation of produced goods (wheat) or existing goods (drinking water) with the costs of their production or their availability (rarity) Do not forget that the most important idea of the concept is essentially that at a certain stage the costs of producing a good (production costs) begin to grow faster than the production of that good itself. Another important idea of the concept is this: the more abundant the good, the less valued it is. As Marshall said, “the more a person has of any thing, the less, other equal conditions(i.e., with equal purchasing power of money and with equal quantity of money at his disposal), there will be a price that he is willing to pay for a small additional quantity of it, or, in other words, his marginal price of demand for it decreases."

"Quoted from: Marshall A. Principles of economic science / Translated from English. In 3 volumes. M. 1993. Vol. 1. P. 158.

In essence, this is a formulation of the principle of diminishing marginal utility (see 6.1)

Economic efficiency

Concept of economic efficiency

Economic efficiency- ϶ᴛᴏ obtaining the maximum possible benefits from available resources. It is worth saying that for this you need to constantly compare benefits (benefits) and costs, or, in other words, behave rationally. Rational behavior lies in the fact that the producer and consumer of goods strive for the highest efficiency and for this purpose they maximize benefits and minimize costs.

If we look at the production possibilities curve (see Fig. 2.1), then at the maximum possible efficient production point A, B, C, D, E, reflective possible options production of goods must lie on the surface of the curve, i.e. as if on the edge, the limit of production possibilities. If a particular point lies to the left of the curve, then ϶ᴛᴏ means incomplete use of production capabilities (economic resources), and if to the right, it means an excess of the country’s production capabilities, i.e. the unreality of producing goods in such volumes. We can conclude that “efficiency occurs when society cannot increase the output of one good without reducing the output of another. An efficient economy lies at the edge of production possibilities.” 2

Quote by: Samuelson P.A., Nordhaus V.D. Economy. Ed. 15th / Per. from English M., 1997. P. 55.

Pareto efficiency (Pareto optimum)

In essence, the conclusion drawn follows from the formulation of economic efficiency proposed by the Italian economist Vilfredo Pareto (1848-1923). Studying the efficiency of production and distribution of goods on the market with limited resources, Pareto came to the conclusion that this is a state of the market in which no one cannot improve its condition without worsening the position of at least one of the market participants. This definition of efficiency is often called Pareto optimum, Pareto optimality, Pareto-optimal commons. It is used not only in economics, but also in other sciences, incl. in mathematics.

Measuring the efficiency of production and consumption of goods

When calculating the efficiency of production of goods, the costs of one or all factors are compared with the benefit received (good). It is already clear from this that there can be many indicators of production efficiency. Yes, they measure performance labor (dividing the cost of all products produced by the number of workers or by the cost of labor inputs), material consumption(dividing the cost of consumed natural resources, including those that have undergone primary processing - raw materials, fuel and energy, materials and semi-finished products, by the cost of manufactured products), capital intensity(dividing the value of capital employed by the value of output produced) or return on capital(the inverse indicator obtained by dividing the cost of manufactured products by the cost of capital used) If the cost of manufactured products is compared with the cost of all factors used, then we talk about profitability. The material was published on http://site

When calculating the efficiency of acquiring and consuming goods, the consumer usually proceeds from their alternative cost, i.e. from the value of those goods that he has to give up when receiving the desired good. It is clear that this opportunity cost is different for different consumers, since their tastes are different. Moreover, for most goods in society there is a generally recognized, established alternative cost.

Efficiency at micro and macro level

Approaches to measuring performance at the micro and macroeconomic levels differ.

The company counts only those costs that it incurred in producing the good, and the buyer usually correlates the good he buys with the market value of those goods that he has to give up in order to get the desired good. At the same time, both of them do not take into account those costs that are borne by the whole society, but which are not always included in the company’s costs for the production of a good and, in particular, in its market value. If, for example, the state provides a manufacturer with a subsidy from its budget for the production of cheap goods for children and the elderly, then it underestimates the value of its costs (production costs) for the manufacturer, and the value of the alternative cost for the consumer. As a result, their production and consumption of these goods will be more efficient than in the absence of subsidies.

Moreover, in this case, the entire society bears the costs in the form of a subsidy provided from the state budget, which is financed by taxes collected from the entire society. Thus, if we take into account these costs, then efficiency at the macroeconomic level (the so-called national economic efficiency) will be lower than at the microeconomic level (firm efficiency)

Moreover, at the microeconomic level, other costs are not always taken into account when calculating efficiency. Thus, a firm usually does not include in its production costs the cost of those resources it owns (for example, land plot, patents for her own inventions), for the use of which she does not pay anyone (see 10.1)

Division of labor, specialization and exchange

Adam Smith begins his famous work “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776) with the words: “The greatest progress in the development of the productive power of labor, and a great deal of the art, skill, and intelligence with which it is directed and applied, appears to have appeared , a consequence of the division of labor."

" Quoted from: Anthology of economic classics. In 2 volumes. M., 1991. T. 1. P. 83.

Further, in the example of the production of pins, Smith shows that one worker produces no more than 20 pins a day if he makes them himself from start to finish, while ten workers in a pin factory, dividing among themselves individual operations for the production of pins, they produce over 48,000 per day, i.e. more than 4800 pins per employee.

Concepts of division of labor and specialization

The division of production between various works, enterprises and their divisions, industries, regions of the country, as well as between countries is called division labor. Accordingly, they distinguish between professional, inter-company and intra-factory, inter-industry, inter-regional and international division labor. There is also a division of labor between parts and units, i.e. manufacturing not a fully finished product, but its elements.

During the division of labor, workers, enterprises and their divisions, industries, regions, countries focus on the production of a limited range of products. Based on the division of itching, the orientation of manufacturers towards the production of individual products and their elements is called specialization.

Specialization gives the manufacturer many advantages. First of all, by specializing in the production of a particular product, the manufacturer has the opportunity to most effectively use the economic resources available to him or her. Thus, Russia’s specialization in world trade in the export of raw materials, fuel and energy, materials and semi-finished products is largely explained by the fact that it allows us to use the enormous mineral resources available to our country. Secondly, specialization in the production of a limited set of products allows the manufacturer to effectively use his ability to produce them (as in the example with pins)

Exchange

If each participant in economic life specializes in the production of a limited range of products, then all other benefits he needs as a producer and consumer must be received from outside. It is worth saying that for this purpose he exchanges the goods at his disposal ( production resources and consumer goods) for those benefits that he needs. In economic life, the exchange of goods usually takes the form of trade between people, firms, regions, and countries.

conclusions

1. Economic life is based on the need to satisfy people's needs for various economic goods. The vast majority of these needs are satisfied through the production of goods. In a market economy, where these goods are bought and sold, they are called goods and services.

2. The law of increasing needs means that needs grow faster than the production of goods. This occurs because economic needs are unlimited, and the production of economic goods is limited due to limited economic resources.

3. Economic resources refer to all types of resources used in the production of goods and services. These include natural and labor resources, capital (both real and monetary), entrepreneurial abilities, and knowledge. The infinity of needs and the limited resources form the axis around which it revolves economic life, and the core of economics as a science.

4. Resources are intertwined, mobile and, most importantly, interchangeable (alternative), although not completely. Therefore, an entrepreneur (production organizer), in conditions of limited resources, constantly looks for the most rational combination of them, using interchangeability. In a market economy, each of the economic resources represents a large resource market.

5. On the basis of economic resources, the production of economic goods is carried out. With limited (rarity) resources, one has to choose what goods to produce and what production capabilities there are. With this, the concept of alternative (imputed) cost (cost) is used, which means what one has to give up to produce the desired good.

6. The increase in opportunity costs as each additional unit of output is produced will be the essence of the law of increasing opportunity costs. Closely related to it is the law of diminishing returns, which means that the increase in output becomes less and less as new units of an economic resource are added in combination with a constant amount of other economic resources.

7. Economic theory and practice widely use the concept of marginal (marginal) values, by which they mean an increase in one value caused by an increase in another value by one (provided that all other values remain unchanged) They talk about marginal costs, marginal revenue, marginal utility. The concept of limit values is based primarily on two ideas. First of all, at a certain stage, the costs of producing a good (production costs) begin to grow faster than the production of that good itself. Secondly, the more abundant a good is, the less it is valued.

8. Economic efficiency - ϶ᴛᴏ obtaining the maximum possible benefits from available resources. It is worth saying that for this you need to constantly compare benefits (benefits) and costs (costs), or, in other words, behave rationally. Rational behavior lies in the fact that the producer and consumer of goods strive for the highest efficiency and for this purpose they maximize benefits and minimize costs. Efficiency is calculated in various ways.

9. The division of production between various workers, enterprises and their divisions, industries, regions of the country, as well as between countries is called the division of labor. Accordingly, a distinction is made between professional, inter-firm and intra-factory, inter-industry, inter-regional and international division of labor. Based on the division of labor, the orientation of producers towards the production of individual products and their elements is called specialization.

Note that terms and concepts
Economic benefits
Economic needs
Goods and services (goods)
Essential products
Engel's law
Economic resources
Interchangeability (alternativeness) of economic resources
Production capabilities
Alternative (imputed) cost (costs)
Law of Increasing Opportunity Cost
Law of Diminishing Returns
Economic efficiency
Pareto efficiency (Pareto optimum)
Division of labor
Specialization

Self-test questions

1. How is the law (principle) of increasing needs formulated?

2. List the economic resources you know.

3. What consequences arise from the combination of unlimited needs and limited resources?

4. What does such a property of economic resources as their interchangeability (alternativeness) give an entrepreneur?

5. Explain what the production possibilities curve shows?

6. How are the law of increasing opportunity costs and the law of diminishing returns similar and different?

7. Where in economic life, in your opinion, can the ideas of marginalism be used?

8. What economic efficiency indicators do you know and how are they calculated?

9. What is the difference between corporate and national efficiency?

10. Prove that specialization is related to the division of labor.