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Economic study

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Economic study

  1. 1. ECONOMICSECONOMICS PROJECTPROJECT
  2. 2. What is economics?What is economics?  Economics is a science of humanEconomics is a science of human behaviour concerned with the allocation ofbehaviour concerned with the allocation of scrace means in such manner thatscrace means in such manner that consumer can maximise their satisfaction,consumer can maximise their satisfaction, producers can maximise their profit, andproducers can maximise their profit, and the society can maximise its socialthe society can maximise its social welfare.welfare.
  3. 3. ECONOMICS MICRO ECONOMICS MACRO ECONOMICS
  4. 4. MICROECONOMICSMICROECONOMICS  Micro economic is that part of economicsMicro economic is that part of economics which deals with the individual part ofwhich deals with the individual part of economic system like individualeconomic system like individual household,individual firms & industry.household,individual firms & industry.  In the study of microeconomics we have toIn the study of microeconomics we have to face the central problem of an economy.face the central problem of an economy.
  5. 5. CENTRAL PROBLEM OF ANCENTRAL PROBLEM OF AN ECONOMYECONOMY  There are mainly three central problem ofThere are mainly three central problem of an economcs are as follows :an economcs are as follows : - What to produce?- What to produce? - How to produce?- How to produce? - For whom to produce?- For whom to produce?
  6. 6. What to produce?What to produce?  For solution of this problem economic hasFor solution of this problem economic has to decide about the production ofto decide about the production of commodities to be produced in thecommodities to be produced in the economy as per requirement.with thiseconomy as per requirement.with this problem how much is to be produced isproblem how much is to be produced is also linked.also linked.
  7. 7. GUIDING PRINCIPLEGUIDING PRINCIPLE  The guiding principle for what to produceThe guiding principle for what to produce is production of maximum goods &is production of maximum goods & services to satisfy the maximum wants ofservices to satisfy the maximum wants of the people.the people.
  8. 8. How to produce?How to produce?  This problem Is related with theThis problem Is related with the technology of production because atechnology of production because a commodities can be produced with thecommodities can be produced with the help of more than one method.help of more than one method. For example : cloth can be produced withFor example : cloth can be produced with the help of handalom & also with thethe help of handalom & also with the textiles miles.textiles miles.
  9. 9. Technology can be classified underTechnology can be classified under two headig :two headig :  Labour intensive technology :Labour intensive technology : The technlogy in which the proportion ofThe technlogy in which the proportion of labour is more than the proportion oflabour is more than the proportion of capital.capital. This technology is suitable for developingThis technology is suitable for developing country like india,pakistan etc.country like india,pakistan etc.
  10. 10.  Capital intensive technology :Capital intensive technology : The technology in which the proportion ofThe technology in which the proportion of capital is more than the proportion ofcapital is more than the proportion of labour.labour. This technology is helpful for developedThis technology is helpful for developed country,like USA , Japan,Germany etc.country,like USA , Japan,Germany etc.
  11. 11. GUIDING PRINCIPLEGUIDING PRINCIPLE  The guiding principle for solving theThe guiding principle for solving the problem of how to produce is adaption ofproblem of how to produce is adaption of that technique in which there is least costthat technique in which there is least cost to produce per unit of the commodity.to produce per unit of the commodity.
  12. 12. FOR WHOM TO PRODUCE?FOR WHOM TO PRODUCE? This problem is basically the problem ofThis problem is basically the problem of distribution of income.We know that factor inputsdistribution of income.We know that factor inputs contributing in production of any commodities.Socontributing in production of any commodities.So , the actual claim on this final output is of factor, the actual claim on this final output is of factor inputs in the form of wage , rent , interest , profit.inputs in the form of wage , rent , interest , profit. But , now a days every goverment is welfareBut , now a days every goverment is welfare goverment. So government cares to fulfill urgentgoverment. So government cares to fulfill urgent wants of the people living in the eeconomy.wants of the people living in the eeconomy.
  13. 13. GUDINING PRINCIPLEGUDINING PRINCIPLE  Guiding principle for solving the problemGuiding principle for solving the problem ‘FOR WHOM TO PRODUCE’ is to fulfill‘FOR WHOM TO PRODUCE’ is to fulfill the urgent wants of factor inputs and restthe urgent wants of factor inputs and rest person also the maximum possible extent.person also the maximum possible extent.
  14. 14.  PRODUCTION POSSIBILITY FRONTIERPRODUCTION POSSIBILITY FRONTIER OROR PRODUCTION POSSIBILITY CURVEPRODUCTION POSSIBILITY CURVE
  15. 15. MEANINGMEANING ::  Production possibility curve whichProduction possibility curve which indicates all combination of two goodsindicates all combination of two goods produced by an economy with full andproduced by an economy with full and efficient use of its given resources underefficient use of its given resources under given technology.given technology.
  16. 16. The PPF :The PPF :  Let’s introduce the Production PossibilitiesLet’s introduce the Production Possibilities FrontierFrontier – better known as the PPFbetter known as the PPF  The PPF is a basic workhorse inThe PPF is a basic workhorse in economics.economics.  Important for understanding some basicImportant for understanding some basic issues in economics.issues in economics.
  17. 17. PPF CurvePPF Curve Concave shape 0 y x
  18. 18. NOW THE QUESTION IS ARISE ,NOW THE QUESTION IS ARISE , WHY THE PPFWHY THE PPF CURVE ISCURVE IS CONCAVE ?CONCAVE ?  Answer of this question is, the resourcesAnswer of this question is, the resources implied in the production of a good isimplied in the production of a good is specialised in the production of thatspecialised in the production of that good ,so when it is transferred to producegood ,so when it is transferred to produce an another good then it becomes lessan another good then it becomes less productive.So it becomes a concaveproductive.So it becomes a concave shape.shape.

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