Micro, Macro, Market, Equilibrium, Demand,Supply, Graph, Goods,Factors of Production........

1. Designed by
Qazi Zuhair

2. A study of human behavior in ordinary business
of life
Economics is a study of social sciences that
concerned with the production, distribution,
and consumption of goods and services

3. Economics
 Micro Economics
In economics the study of individual
components is termed as micro economics.
 Macro Economics
In economics the study of aggregate
components is termed as macro-
economics. Macro means “Large,
Aggregate”

4. MICRO VS MACRO

5. Graph
 Independent variable:
A variable whose values
do not depend on the
values of same other
 Dependent variable:
A variable whose values do
depend on the value of
some other variable
 Slope of Gradient: m
Direct Relationship
Indirect Relationship/Inverse

6. Utility
Is the ability or power of a commodity which fulfill
human needs or desire
 Total Utility:
Overall utility received from the consumption of a
commodity
 Marginal Utility: (Additional/Extra)
Utility received from the
consumption of an additional unit.

7. Utility
Quantity
(Q)
Total Utility
(TU)
Marginal Utility
(MU)
0 - -
1 10 utils 10
2 18 utils 8
3 24 utils 6
4 28 utils 4
5 30 utils 2
6 30 utils 0
7 28 utils -2
MU = ∆TU/ ∆Q
=TU-TU/ Q – Q
=18-10/ 2-1
MU = 8 Utils

8. Theory of Consumer Behavior
Consumers are in equilibrium when consumer
spends all his/her money income given. The
prices of goods in way that consume total
utility.
Law of Equi-Marginal Utility/Law of
Substitution:
consumer is in equilibrium position when
marginal utility of money expenditure on each
goods is the same

9.  Substitute Goods
 Two or more goods fulfills the same need
Complementary goods
 Jointly Consumed Goods or Utility received from
join consumption
 Like: Car= Petrol, Pen=Ink

11. Demand
Exist when consumer has:
 Ability to purchase
 Willingness to Purchase
Demand curve:
 Shows buying plan of a consumer
 Shows outside relationship between price and quantity
demanded

12. Supply
 Supply exists when from:
 Has resource and technology to
produce it
 Can profit by producing it
 Has definite plan to sell it
Supply curve
 Shows selling plan of a producer
 Show entire relationship between
price and quantity supplied

13. Market
Is a situation in which buyer and sellers
negotiate for the exchange of a goods or
services

14. Equilibrium

15. Equilibrium
 Equilibrium:
A situation in which opposing for balance each
other
 Market Equilibrium:
When demand is equal to supply
Or when price balance the buying and selling
plan

16. Equilibrium
 Equilibrium Price:
The price at which quantity demanded is equal to quantity
supplied.
 Equilibrium Quantity:
The quantity which is demanded or supplied at equilibrium
price.
 Consumer’s Equilibrium:
A human being wants to satisfy his maximum desire from
his limited resources. Consumer’s equilibrium is that
point at which a person gets maximum satisfaction from
limited or available resources.

17. Factors of Production

18. Factors of Production
Inputs are transformed into Output
 Input: All necessary items essential for
production
 Land: Is a Natural gift
 Labor: All Physical and mental effort
 Capital: All manufactured items used to
produce further goods and services or to earn
profit.
 Entrepreneur: Organize factors of production
and take risks, binder of other factors

19. End of Chapter No.1