Ebooks

For students and practitioners of veterinary science and animal husbandry, economics can often seem like an elusive subject, shrouded in complex theories and abstract models. Traditional economics textbooks, while rigorous, frequently fail to address the unique challenges and opportunities within the livestock sector, leaving learners disconnected from the practical realities of dairy farms, poultry operations, and livestock management. This book seeks to change that narrative, offering a clear, accessible, and industry-focused introduction to economics tailored specifically for the Veterinary Council of India (VCI) syllabus and aspiring entrepreneurs in animal husbandry. This book comprehensively covers the foundational concepts of economics as outlined in the VCI curriculum, including demand and supply, utility, production theories, and factors of production.Each topic is presented with clarity and simplicity, ensuring that even those new to economics can grasp its principles with ease. What sets this book apart is its unwavering commitment to relevance: every concept is illustrated through vivid, real-world examples drawn from the dairy, livestock, and poultry industries. For instance, the law of demand is explored through the lens of milk pricing in rural markets, while the law of diminishing marginal utility is applied to optimizing feed allocation for cattle. These examples transform abstract ideas into practical tools for decision-making in animal husbandry. To introduce deeper understanding and critical thinking, each chapter includes a set of analytical questions that challenge readers to apply economic principles to everyday scenarios in the livestock sector. Whether it’s calculating the elasticity of demand for poultry products or analysing cost structures for a dairy cooperative, these questions bridge theory and practice, equipping students with the skills to tackle real-world challenges. Additionally, each chapter concludes with case studies based questions to build successful ventures in dairy, poultry, and livestock production.

Evolution of Economics as a Discipline 1. Initially, economics was not a separate subject but a part of politics, ethics, and jurisprudence. 2. The study of economic ideas gained prominence through discussions on wealth, trade, and resource management. 3. Adam Smith’s book, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), established economics as a distinct discipline. 4. Due to his contributions, Adam Smith is regarded as the Father of Economics. Origin of the Term “Economics” 1. The word Economics is derived from the Greek term “Oikonomikos”: a) Oikos – Household b) Nomos – Management 2. Originally, Oikonomikos referred to the management of household affairs.

Approaches to study subject matter of economics There are two approaches to study subject matter of economics- 1. Traditional Approach 2. Modern Approach Economics studies human economic activities, which involve the creation, use, exchange, and distribution of wealth. 1. Traditional Approach This approach splits economic activities into four interconnected areas: Consumption, Production, Exchange, and Distribution (CPED). 1. Consumption – Using Goods & Services Consumption refers to the utilization of goods and services to satisfy human needs and wants. It involves the destruction of utility, meaning that once a good or service is consumed, it cannot be reused in its original form i.e. once used, their original form is gone (utility destroyed) Economics studies the nature of human wants, their characteristics, and how individuals make consumption decisions.

Economics revolves around key concepts such as goods value, price, wealth, income, savings, investment, and consumption. These concepts are interconnected and form the foundation of economic analysis. Below is a detailed explanation of each: Goods: Definition, Types, and Economic Importance Definition of Goods Goods refer to tangible or intangible items that satisfy human wants and have value. Goods can be material (physical objects) or non-material (services), and they play a crucial role in fulfilling human needs and desires. They form the basis of economic activity, as humans constantly seek to fulfil their needs and desires. Examples Tangible Goods: You can touch them. Food, clothing, vehicles, dairy products. Intangible Goods (Services): Services you experience. Veterinary services, teaching, medical care. Classification of Goods in Economics Goods can be categorized based on different criteria such as material nature, supply, transferability, consumption, ownership, and income elasticity.

Definition of Demand Demand refers to the desire for a commodity that is backed by both purchasing power and willingness to pay at a given price within a specific period. In economics, we consider effective demand—not just absolute desire. A product is in demand only when individuals are willing and able to purchase it. For example, many farmers may desire to buy cow mats, but if they lack the financial resources or are unwilling to spend on them, it does not count as effective demand. Demand is formally defined as a “schedule or curve that shows the various quantities of a commodity that consumers are willing and able to purchase at different prices, within a specific time frame and market conditions.” Law of Demand The Law of Demand states that, ceteris paribus (all other factors remaining constant), the quantity demanded of a commodity varies inversely with its price. In simpler terms: When the price of a commodity rises, the quantity demanded decreases. When the price of a commodity falls, the quantity demanded increases. This inverse relationship occurs because consumers tend to buy less of an expensive product and more of a cheaper one, provided other factors like income, preferences, and the price of related goods remain unchanged.

Definition of Utility Utility is the ability of a good or service to satisfy human wants and needs in economics. It is an important concept as it represents the satisfaction experienced by a consumer from consuming a good or service Utility characteristics 1. Measuring satisfaction, benefit, or happiness from a good or service is difficult. 2. Economists have devised ways to represent and measure utility in terms of economic choices that can be quantified. 3. Total Utility (TU): The aggregate sum of satisfaction or benefit gained from consuming a given amount of goods or services (e.g., drinking three glasses of water provides more satisfaction than just one). 4. Marginal Utility (MU): The additional satisfaction gained from each extra unit of consumption (e.g., the first glass of water gives maximum satisfaction compared to each additional glass). 5. Total utility usually increases as more goods are consumed. 6. Marginal utility typically decreases with each additional unit consumed, demonstrating the Law of Diminishing Marginal Utility.

Supply is the amount of a good or service sellers are willing to offer for sale at a specific price, in a specific market, over a specific time. Stock vs. Supply • Stock: All the milk a farmer has—say, 1,000L in tanks. • Supply: What he sells—500L at Rs 50/L today. Supply is different from stock, as stock refers to the total quantity of a commodity that exists in the market, while supply is the quantity that is usually offered for sale at a particular price. Law of Supply The law of supply explains the functional relationship between the price of a good and its supply. When all other factors remain constant, an increase in price leads to an increase in supply. This means there is a direct proportional relationship between price and supply. Exceptions 1. Land, rare goods, and labour supply in certain cases do not follow the law of supply. 2. The supply of rare goods cannot be changed with price fluctuations.

Production- Function- The technical law relating inputs to outputs has beengiven the name of production function. Production function expresses the relationship between physical input and physical output of a firm for a given state of technology. Law of Variable Proportion or Law of Diminishing Returns (Short Run Production Function) This law explains the relationship between inputs and outputs in the short period. According to this law, output can be changed by altering variable factors (such as labour and feed) while keeping other factors (such as land and infrastructure) constant. The law states that with an increase in variable factors, keeping other factors constant, total product initially increases at an increasing rate, then increases at a diminishing rate, and finally starts decreasing. 1. Total Product (TP) - Refers to the total output of the firm per period of time. 1. Example: Total litres of milk produced by a dairy farm per day.

The goods and services with the help of which the process of production is carried out, are called factors of production. Economists talk about four main factors of production: land, labour, capital and entrepreneurship (or organization). They are also called as the inputs of production. On the other hand, the goods produced with the help of these inputs, are called as the output. 1. Land Land refers to all natural resources such as forests, water, climate, and soil. It provides space for livestock farms and raw materials for the dairy and meat industries. Features of Land 1. Gift of Nature – Land and climatic conditions are naturally available. For example, the fertile plains of Punjab and Haryana are naturally suited for growing fodder crops like berseem and maize, which are essential for dairy farming. Similarly, the lush green pastures of Uttarakhand, Jammu & Kashmir and Himachal Pradesh provide an ideal environment for rearing sheep and goats. 2. Limited in Supply – Land is fixed, and certain resources like water bodies and fodder resources may deplete over time. Water scarcity in regions like Maharashtra has forced farmers to shift from water-intensive crops to drought-resistant fodder crops.