This presentation belongs to microeconomics.

2. Scarcity and choice:
 Lack of supply of any commodity as compared
its demand is known as scarcity.
 Scarcity is the basic problem of economics
world, which create the problems of choice.
 The problem of scarcity and choice are faced
not only by the individuals but also faced by the
society and nations.

3.  Scarcity is the primary motivator of all
economics activities.
 If everything was plentiful everywhere all the
time what would people trade for or with?
 We are engaged to deal and trade on an
individual and national level due to scarcity.

4. Production possibility curve
 The production possibility curve is a
hypothetical representation of the amount of two
different goods that can be obtained by shifting
resources from the production of one, to the
production of the other.
 The curve is used to describe a society’s choice
between two different goods.

5.  PPC help an economy to transfer resources
from the production of one good to another good
that is from essential to non-essential good,
between consumption and capital goods.
 So it is also known as transformation curve.

6.  The concept of PPC can explain with the
help of following table and diagram.
Production possibilities Good -X Good - Y
A
B
C
D
E
F
0
1
2
3
4
5
15
14
12
9
5
0

7. A
B
C
D
E
F
Inefficient
Output
Good-Y
Good -X

8. Types of micro economics:
1.Simple micro-statics
2.Comparative micro –statics
3.Micro dynamics

9. 2. Comparative micro-statics:
 It compares the equilibrium positions at
different points of time.
 It does not describe the process of
adjustment.
 It is not concern with transitional period.
 Therefore it doesnot provide answer to
the following question.

10. 1. What is responsible for breaking initial
equilibrium,
2. What is responsible for establishing
new equilibrium and
3. What types of other changes occur
between two equilibriums.

11. s1
D
D
D1
D2
E
E1
S
Y
O
X
P1
P
Price
Quantity Demanded and Supplied