Economics

• Central problems of an economy

  Production

  Distribution

  Disposition of goods and services are the basic economics activities of life.
• The main tools of Microeconomics are demand and supply.
• Adam Smith is the founder of the field of microeconomics.
• Macroeconomics is that part of economics theory which studies the behaviour of aggregates of the economy as a whole, including aggregate income and aggregate output.
• The main tools of Macroeconomics are aggregate demand and aggregate supply.
• Positive Economics deals with what are the economic problems and how are they actually solved, dealing with things as they are.
• Normative economics deals with what ought to be and how the economic problems should be solved, telling us what ought to be.
• A Market Economy is one in which means of production are owned, controlled and operated by the private sector, also known as a capitalist economy.
• An economics problem is a problem of choice involving satisfaction of unlimited wants out of limited resources having alternative uses.
• Central problems of an economy include what to produce and how to produce.
• What to produce problem involves selection of goods and services to be produced and the quantity to be produced of each selected commodity.
• How to produce problem refers to selection of technique to be used for production of goods and services.
• Gently planned economy, also known as socialist economy, features state ownership over means of production and decision-making by government.
• There are four factors of production in an economy: Land, Labour, Capital, Enterprise.
• Non-interference of government in an economy is a feature of gently planned economy.
• Reasons for economic problem include iconicity of resources, unlimited human wants, and alternate uses.
• High level of competitions in an economy is driven by profit motive.
• Profit mechanism guides all decisions and it works through force of demand and supply.
• Scarcity refers to limitations of supply in relation to demand for a commodity.
• The features of a Market Economy include private ownership of means of production, independent decision making, and a price system.
• For whom the produce problem relates to the distribution of produced goods and services among the individuals within the economy.
• Production Possibility Frontier (PPF) slopes downwards due to inverse relation between change in quantities of two commodities.
• A leftward shift in Production Possibility Frontier (PPF) happens when there is technological degradation or decrease in resources.
• The level of technology is assumed to be constant in Production Possibility Frontier (PPF).
• Production Possibility Frontier (PPF) is the graphical representative of possible combinations of two goods that can be produced with given resources and technology.
• Marginal opportunity lost (Mod-Moc) refers to the number of units of a commodity sacrificed to gain one additional unit of another in Production Possibility Frontier (PPF).
• The amount of resources in an economy is fixed.
• Resources are fully utilized in Production Possibility Frontier (PPF).
• Allocation of Resources is a problem studied under the problem of Production Possibility Frontier (PPF).
• With the help of given amount of resources, only two goods can be produced.
• Production Possibility Frontier (PPF) aims to determine price of a commodity of factors of production.
• Production Possibility Frontier (PPF) is a concave shape due to increasing Marginal Rate of Transformation (MRT).
• Opportunity cost is the cost of the best alternative forgone in Production Possibility Frontier (PPF).
• Marginal Rate of Transformation (MRT) is the ratio of no of units of a commodity sacrificed to gain an additional unit of another commodity in Production Possibility Frontier (PPF).
• Resources are not equally efficient in production of all products in Production Possibility Frontier (PPF).
• Labour intensive technique and capital intensive technique are types of production methods.
• A rightward shift in Production Possibility Frontier (PPF) happens when there is advancement in technology, growth of resources or an increase in employment level.
• An economy is a system which provides people, the means to work and earn a living.
• Microeconomics is that part of economics theory which studies the behaviour of individual units of an economy, including individual income and individual outputs.
• Degree of Aggregation involves limited degree of Aggregation involves highest degree of Aggregation.