INSTITUTE –University School of

Business
DEPARTMENT -Management
M.B.A
Managerial Economics(24-BAT605)
Faculty Name : Dr. Akriti Gupta (Assistant Professor)

Lecture 3.1.1 DISCOVER . LEARN . EMPOWER

National Income

1
 COURSE OBJECTIVES

• To integrate economic theory with business practice and highlight the application of
economic theory for business decision making.

• To learn how economics analysis can be used in formulating business policies and take
rational managerial decisions.

2
 • Space for
visual (size
National Income 24)
and Its
Measurement
Course Outcome
CO Title Level Will be covered in this
Number lecture
CO4 Evaluate the methods of measurement of Evaluate
national income and its impact on the
economy.

3
National Income

• National income means the value of goods and services produced by a country during a
financial year. Thus, it is the net result of all economic activities of any country during a
period of one year and is valued in terms of money.

• The National Income is the total amount of income accruing to a country from economic
activities in a years time. It includes payments made to all resources either in the form of
wages, interest, rent, and profits.

4
Economic Production

• Economic production refers to the production of those goods and services which are meant
for sale and have market value, and those goods and services which are produced and
provided jointly to the people by the government and public organizations, for which
people pay indirectly through tax payment.

• All marketable production is economic production but all economic production is not
marketable.

5
Non Economic Production

• Non-economic production includes the production of goods and services that are not meant to
be sold, nor is there any market for them, nor do they have a market price.

• To this category belong mainly the following services:

i. Services rendered to self
ii. Services provided to the family members
iii. Services provided by the neighbors to each other

• These services are not included in the measurement of the national income.

6
Intermediate and Final Goods

• Intermediate goods- The goods that flow from one stage to another in the process of
production of a good, with their form changing.

• Final goods- The goods that reach the final stage of production and flow to their ultimate
consumers/ users.

• The need for distinction between the intermediate and final products arises because of the
problem of double counting.

7
Intermediate and Final Services

• The classification of services under the intermediate and final product categories depends
on the purpose of their use.

• When used for production purpose, these services are treated as intermediate products and
when used for private consumption, they are treated as final products.

8
Transfer Payments

• Transfer payments are the payments made by people to the people, and by government to
the people, without corresponding transfer of goods and services or addition to the total
output.

• Transfer payments are not taken into account while counting the national income.

9
Consumer and Producer Goods

• Consumer goods- The goods and services that are consumed by the people to directly satisfy
their needs and yield utility to the consumer.

• Producer goods- The category of final products which are used for enhancing the production
capacity of the national economy with the purpose of increasing the flow of income in the
future.

10
References
• T1: Pindyck, Robert and Rubinfeld, Daniel (2017), Microeconomics, 8 th Edition, Pearson
Publication
• T2: Varian, R and Hal, J (2014), Intermediate Microeconomics, 8th Edition, East-West
Press.
• T3: Dwivedi, D.N, (2015), Macroeconomics – Theory and Policy, 4th edition, Tata
McGraw Hill Publications.
• REFERENCE BOOKS
•
• R1: William J. Baumol, Alan S. Blinder, (2016), Micro Economics – Principles and policy,
13th edition, Cengage Learnings
• R2: Mankiw, Gregory N, (2014), Principles of Macroeconomics, 8th edition, Cengage
Learning.

11
Web Link

https://www.toppr.com/guides/fundamentals-of-economics-and-management/national-incom
e/concept-of-national-income/#:~:text=National%20Income-,Concept%20of%20National%20In
come,valued%20in%20terms%20of%20money
.

Video Link

https://www.youtube.com/watch?v=A374ELBK7Cc

12
 Blackboard
Assessment Pattern

Components HT-1 HT-2 Assignment Surprise Test Business Quiz GD Forum Attendance Scaled
Marks

Max. Marks 10 10 6 4 4 4 2 40

13
THANK YOU