This document covers key concepts in microeconomics. It discusses how economics studies scarcity and the choices that must be made about allocating limited resources. It defines opportunity cost and marginal opportunity cost, explaining that increasing production of one good requires giving up production of another. It also introduces the production possibilities curve (PPC) as a way to visualize scarcity and tradeoffs, showing the maximum combinations of goods an economy can produce with its resources. The PPC slopes downward and is concave in shape.

1. UNIT -1
MICRO ECONOMICS
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Kishan
Lal
Sharma(BBA,MBA)

2. ECONOMY
IT IS THE SYSTEM WHICH PROVIDE PEOPLE THE MEANS TO WORK
AND EARN A LIVING
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Kishan
Lal
Sharma(BBA,MBA)

3. PARTS OF ECONOMY???
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Kishan
Lal
Sharma(BBA,MBA)

4. VITAL FUNCTION OF ECONOMY
Production
Consumption
Capital
Formation
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Kishan
Lal
Sharma(BBA,MBA)

5. WHY STUDY ECONOMICS?
THE MAIN REASON FOR THE STUDY OF ECONOMICS CAN BE
SIMPLIFIED TO A SINGLE WORD--- SCARCITY
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Kishan
Lal
Sharma(BBA,MBA)

6. SCARCITY
 It refers to the limitation of supply in relation to demand for a
commodity
 Economics is Concerned with selection of resources under
conditions of a scarcity
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Kishan
Lal
Sharma(BBA,MBA)

7. RESOURCES
FACTORS OF PRODUCTION – FOP I.E FACTORS OF PRODUCTIONS I.E .LAND, LABOR,
CAPITAL, ENTERPRENEURSHIP
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Kishan
Lal
Sharma(BBA,MBA)

8. ECONMIC PROBLEM
IT REFERS TO PROBLEM OF CHOICE INVOLVING SATISFACTION OF UNLIMITED
WANTS OUT OF LIMITED RESOURCES HAVING ALTERNATIVE USES.
Choice ?
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Kishan
Lal
Sharma(BBA,MBA)

9. RESONS FOR ECONOMIC PROBLEM
 Scarcity of Resources:- Resource are limited in relation
to their demand and economy cannot produce all what people
want.
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Kishan
Lal
Sharma(BBA,MBA)

10.  Unlimited Human wants: Human wants are never
ending i.e they can never be carefully satisfied as soon a s
one want is satisfied a not her new wants emerges
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Kishan
Lal
Sharma(BBA,MBA)

11.  Alternative uses: resources are not only scare, but they
can also be put to various uses. It makes choice among
resources more important.
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Kishan
Lal
Sharma(BBA,MBA)

12. ECONOMICS
ECONOMICS IS THE STUDY OF SCARCITY AND ITS IMPLICATIONS FOR THE USE
OF RESOURCES, PRODUCTION OF GOODS AND SERVICES, GROWTH OF
PRODUCTION AND WELFARE OVER TIME, AND A GREAT VARIETY OF OTHER
COMPLEX ISSUES OF VITAL CONCERN TO SOCIETY.
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Kishan
Lal
Sharma(BBA,MBA)

13. MICRO AND MACRO ECONOMICS
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Kishan
Lal
Sharma(BBA,MBA)

14. 14
Kishan
Lal
Sharma(BBA,MBA)

15. POSITIVE AND NORMATIVE ECONOMICS
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Kishan
Lal
Sharma(BBA,MBA)

16. CENTRAL PROBLEMS OF AN ECONOMY
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Kishan
Lal
Sharma(BBA,MBA)

17. 1. What to produce?
 It is one of the central problems in an economy. It is related to the type
and quantity of goods and services that need to be produced.
 Since resources are in limited quantities, producing more of one good
will result in less production of the other.
2. How to produce?
 This aspect deals with the process or technique by which the goods and
services can be produced. Generally, there are two techniques of
production:
 Labour intensive techniques
 Capital intensive techniques
 The choice of technique for production depends on the availability of the
resource in that nation, hence resource allocation becomes a challenge.
3. For whom to produce?
 This problem deals with determining the final consumers of the goods
produced. As resources are scarce in an economy, it becomes difficult to
cater to all sections of the society.
 “selection of category of people”
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Kishan
Lal
Sharma(BBA,MBA)

18. PRODUCTION POSSIBILITIES CURVE
The production possibilities curve (PPC) is a graph that
shows all of the different combinations of output that can
be produced given current resources and technology.
Sometimes called the production possibilities frontier (PPF),
the PPC illustrates scarcity and tradeoffs.
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Kishan
Lal
Sharma(BBA,MBA)

19. OPPORTUNITY COST
 When economists refer to the “opportunity cost” of a resource,
they mean the value of the next-highest-valued alternative
use of that resource.
For example, you spend time and money going to a movie, you
cannot spend that time at home reading a book, and you can't
spend the money on something else
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Kishan
Lal
Sharma(BBA,MBA)

20. MARGINAL OPPORTUNITY COST
 The marginal opportunity cost measures the amount of a
good that has to be sacrificed for each additional unit of
the other good. When everyone is working on houses we
can produce 20 houses annually.
For example, a company may produce 10,000 units of
pens in eight hours per day. If the managers of the
company decide to increase the production of the pens to
12,000 units per day, the cost can be calculated by using the
marginal opportunity cost concept
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Kishan
Lal
Sharma(BBA,MBA)

21. MARGINAL RATE OF TRANSFORMATION
The marginal rate of transformation (MRT) is the number of
units or amount of a good that must be forgone to create
or attain one unit of another good. It is the number of units
of good Y that will be foregone to produce an extra unit of
good X while keeping the factors of production and technology
constant.
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Kishan
Lal
Sharma(BBA,MBA)

22. THE TWO BASIC CHARACTERISTICS OR FEATURES
OF PPF ARE:
 PPF slopes downwards: PPF shows all the maximum possible
combination of two goods, which can be produced with the
available resources and technology. ...
 PPF is Concave Shaped:
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Kishan
Lal
Sharma(BBA,MBA)

23. ATTAINABLE AND UNATTAINABLE COMBINATION
OF CURVE
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Lal
Sharma(BBA,MBA)

24. SHAPE OF THE PPC CURVE
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Lal
Sharma(BBA,MBA)

25. THANK YOU
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Kishan
Lal
Sharma(BBA,MBA)