INTEGRATED ENGLISH REFERENCE NOTES - Prof. Dr. Ziya Yurttaş

Economics
58
� Economics is the study of man's activities aimed at satisfying the unlimited human
needs by means of limited resources. These activities include production,
distribution, consumption etc.
� Supply and demand are among the most important concepts in Economics. Supply
refers to the amounts of a commodity that the suppliers are willing to sell at
certain price levels in a certain market at a certain time. On the other hand,
demand refers to the amounts of a commodity that the consumers are willing to
buy at certain price levels in a certain market at a certain time.
� In a free market, the price of a commodity is determined at a point where the
amounts of supply and demand are equal, the price of a commodity goes up as the
demand goes up, or the supply goes down, or vice versa.
� Inflation is an economic phenomenon which appears as a steady and sharp increase
in general price level. Inflation, by definition, refers to a high level of increase in
money supply in relation to the increase in production. Inflation can also be
defined as too much demand in relation to supply. It follows that the solution to
inflation is to decrease demand and increase supply by certain measures.
� According to the law of diminishing returns, in production when one factor is
increased constantly while the others are held constant. the output will show three
stages:
1) Increases at an increasing rate.
2) Increases at decreasing rate.
3) Reaches a maximum and thereafter decreases.
The law of diminishing returns is also called the law of diminishing marginal
productivity. The law of diminishing returns is illustrated as follows:
output
Total product
input