Economics
The average income of an individual in India can be viewed through different metrics, each providing a unique perspective.
Per Capita Net National Income:
- As of 2023, the per capita net national income in India was approximately ₹172,000 per annum.
Average Monthly Income:
- The average monthly income of an individual in India is estimated to be around ₹14,333.
Important Considerations:
- These figures are averages and do not reflect the income distribution across the population, which can vary significantly.
- Income disparities exist between urban and rural areas, as well as across different states and social groups.
The origins and development of economics in the West can be traced through several key periods and influential thinkers. Here’s a brief overview:
Early Foundations (Antiquity to the Middle Ages):
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Ancient Greece: Philosophers like Aristotle discussed economic concepts such as the division of labor, property, and trade. Aristotle distinguished between "oikonomia" (household management) and "chrematistics" (wealth accumulation), viewing the former as natural and the latter as potentially corrupting. Source: Britannica
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Roman Empire: Focused mainly on practical aspects of economic administration, such as managing agriculture, taxation, and trade within the vast empire. Source: Britannica
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Medieval Period: Thomas Aquinas and other scholastic philosophers addressed economic issues from a moral and ethical standpoint, focusing on just prices, fair trade, and the legitimacy of interest. Source: Stanford Encyclopedia of Philosophy
Mercantilism (16th-18th Centuries):
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Emergence of Nation-States: Mercantilism arose with the consolidation of nation-states in Europe. It advocated government control of the economy to maximize exports and minimize imports, accumulating wealth in the form of gold and silver. Source: Investopedia
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Key Policies: Included protectionist measures such as tariffs, subsidies for domestic industries, and the establishment of colonies to provide raw materials and markets. Prominent figures included Thomas Mun and Jean-Baptiste Colbert. Source: Britannica
Classical Economics (18th-19th Centuries):
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Adam Smith: The Wealth of Nations (1776) is a foundational text, advocating for free markets, division of labor, and the "invisible hand" by which individual self-interest promotes societal welfare. Source: Britannica
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David Ricardo: Developed the theory of comparative advantage, arguing that countries should specialize in producing goods they can produce at a lower opportunity cost. Source: Britannica
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Thomas Malthus: Known for his theory on population growth, arguing that population tends to increase faster than the means of subsistence. Source: Britannica
Marxist Economics (19th Century):
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Karl Marx: Critiqued capitalism, arguing that it inevitably leads to exploitation of workers, class struggle, and eventual revolution. His major work, Das Kapital, analyzes the capitalist mode of production. Source: Britannica
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Labor Theory of Value: Marx adopted and expanded the labor theory of value, asserting that the value of a commodity is determined by the amount of labor required to produce it. Source: Investopedia
Neoclassical Economics (Late 19th-20th Centuries):
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Marginalism: Focused on marginal utility and marginal cost in decision-making. Key figures include Carl Menger, William Stanley Jevons, and Léon Walras. Source: Britannica
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Alfred Marshall: Synthesized classical and marginalist ideas, emphasizing supply and demand, market equilibrium, and the importance of time in economic analysis. Source: Britannica
Keynesian Economics (20th Century):
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John Maynard Keynes: Argued that government intervention is necessary to stabilize the economy, especially during recessions. His book, The General Theory of Employment, Interest and Money (1936), revolutionized macroeconomics. Source: Britannica
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Fiscal Policy: Advocated the use of government spending and taxation to influence aggregate demand and employment. Source: Investopedia
Contemporary Economics (20th-21st Centuries):
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Monetarism: Emphasizes the role of money supply in the economy, associated with Milton Friedman. Source: Britannica
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New Classical Economics: Incorporates rational expectations and microfoundations into macroeconomic models. Source: Investopedia
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Behavioral Economics: Integrates psychological insights into economic analysis, studying how cognitive biases affect decision-making, with key figures like Daniel Kahneman and Amos Tversky. Source: Nobel Prize Website
Incremental analysis, also known as marginal analysis, is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. In other words, it's a decision-making technique used in business to determine the true cost and benefit differences between alternatives.
Here are key aspects of incremental analysis:
- Focus on Relevant Costs and Revenues: Only costs and revenues that change as a result of a decision are relevant. Sunk costs (costs already incurred and cannot be recovered) and costs that remain the same regardless of the decision are ignored.
- Marginal Cost and Revenue: It compares the marginal cost (the additional cost of producing one more unit or taking one more action) with the marginal revenue (the additional revenue gained from that unit or action).
- Decision Rule: A decision is typically considered beneficial if the incremental revenue exceeds the incremental cost.
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Applications:
- Pricing Decisions: Determining the optimal price point by considering the impact on sales volume and revenue.
- Production Decisions: Deciding whether to increase or decrease production levels.
- Make-or-Buy Decisions: Evaluating whether to manufacture a product internally or outsource it.
- Accepting Special Orders: Assessing whether to accept a one-time order at a special price.
For example, imagine a company is considering accepting a special order for 1,000 units at a price lower than its usual selling price. Incremental analysis would involve comparing the additional revenue from the order with the additional costs of producing those 1,000 units (direct materials, direct labor, variable overhead). If the additional revenue exceeds the additional costs, accepting the order would increase profit, even though the price is lower than usual.
Investopedia provides a thorough explanation of incremental cost with examples: Incremental Cost Definition