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Economics
Economics
Definition Of Economics
“Economics is the science of decision making“
• Macroeconomics
• Macroeconomics is the study of the economy as a
whole.
• Its goal is to explain the economic changes that affect
many households, firms, and markets at once.
Fundamental Economic
Problems
• Every Economic society – whether it is an advanced
industrial nations , a certainly planned economy, or an
isolated tribal nation – must confront and resolve three
Fundamental Economic Problems .
• Factors of Production
• Land,
• Labor,
• Capital and
• Technology.
The Production Possibilities
Frontier
• The production possibilities frontier is a graph
that shows the combinations of output that the
economy can possibly produce given the
available factors of production and the available
production technology.
Figure : The Production Possibilities Frontier
Quantity of
Food
Produced
Infeasible point
3,000 D
C Efficient point
2,200
2,000 A Efficient point
Production
Inefficient point possibilities
frontier
1,000 B
4,000
3,000
2,100 E
2,000
A
3,000
2,400 E
2,000
A
Or
3,000
C
2,200
Decrease 200 unit Increase 100 unit
of food A of Cloth
2,000
Production
possibilities
frontier