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4thNov-2021 economics

Economics:
Economics is the study of how society uses its limited resources. Economics
is a social science that deals with the production, distribution, and
consumption of goods and services.

Rational:
A person who aims at maximization of it’s interest

Scarcity Problem:
Scarcity is where wants are unlimited but resources to fulfil those wants are
limited
Example:
A man wishes to build a house on a piece of land he purchased, but he
doesn’t have labor, capital

Labor:
Any mental or physical contribution done by humans to produce goods or
services

Land:
Land includes all natural and god gifted resources

Capital:
All goods used to produce goods/services, A man made resource

Entrepreneur:
An Entrepreneur is a risk taker for factor of production
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Opportunity Cost:
Opportunity cost is the next best alternative

Micro Economics & Macro Economics:

Resources:
1) Free or Unlimited resources
2) Scarce or limited resources

Choice:
Choice is the preference given to any good and service among different
goods and services by the consumers
Economic Goods:
An economic good is a good or service that is scarce , limited in supply ,
having an opportunity cost

PPC(Production Possibility Curve)

PPC shows the maximum number of all combinations of two goods that an
economy can produced by employing all available resources with efficient
method of production and fixed state of technology.

A point inside PPC shows -unemployment- of resources

A point beyond PPC is unattainable point given resources
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Trade Off:
Trade off means production of one cannot be increased without decreasing
the production of the other good
Outward Shift:
Outward Shift in PPC shows an increase in Quantity or Quality of resources

Inward Shift:
Shows depletion of resources

Price Elasticity of Demand:

PED shows %age change in quantity demanded due to percentage change in
price of the product. It is given as

PED= percentage change in quantity demanded

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Percentage change in price demanded

‘Sign of PED is always negative , due to law of demand. This shows inverse
relation in price and quantity demanded

1)Inelastic Demand (Between 0-1)

2)Elastic Demand (1-infinite)
3)Perfectly inelastic demand (Equal to 0)
4)Unit Elastic demand (Equal to 1)
5)Perfectly Elastic Demand (Equal to infinite)
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Supply:
Shows willingness and ability of a producer to make available goods or
services of sale at given market price

Law of Supply:
Keeping all non-price factors constant ,an increase in price leads to an
increase in quantity supplied by producer and vice-versa. Hence there is a
direct relation between price of a product and quantity supplied

Supply Schedule:
Table that shows direct relation between price and quantity supplied is called
supply schedule
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Dis-equilibrium:
Disequilibrium is a situation where internal and/or external forces prevent
market equilibrium from being reached or cause the market to fall out of
balance

Application of PED: