School of Economics

  Shifting of PPC : PPC can shift in following circumstances. Change in resources Change in technology 1-Change in resources:  PPC can shift both rightward or forward and leftward or backward due to change in resources. Change in resources means either increase in resources or decrease in resources. a- Increase in resources:  If resources are increased either quantitative or qualitative we can produce more of both goods thus PPC shift rightward or forward. Figure-3 In fig-3,When resources are increased PPC shift from ab to cd.  b-decrease in resources:  If resources are decreased either quantitative or qualitative we can produce less of both goods thus PPC shift leftward or backward. Figure-4 In fig-4,When resources are decreased PPC shift from cd to ab. 2-Change in technology: When efficient technology comes into existence which are suitable for both goods then we can produce more of both goods thus PPC shift to rightward or forward.  figure -5 in figure 5, when modern technology

 Attainable and unattainable combinations of PPC : Those combination which are lie either on PPC or the inside of PPC are called attainable combinations, but those combinations which are lie outside the PPC are called unattainable combination of PPC.  Figure-2 In the figure-2, A,B,C& Z are attainable combinations of PPC, where combinations A,B,C offer fuller utilisation of resources but combination Z offers underutilisation of resources, while on the other hand combination K is unattainable combination. For more detail: please watch this video ,subscribe #vc official on youtube.

Production possibility  curve Assumptions: 1-Resources are given and cannot change. 2-Given resources are fully and efficiently utilised. 3-Technology is constant. Production possibility schedule: It is the tabular representation of different possible combination of two goods which can be produced assuming above assumptions.   COMBINATIONS A B C D E RICE(in Kg) 100 90 70 40 0 WHEAT(in Kg) 0 10 20 30 40    Production possibility curve: It is a curve showing different possible combination of two goods which can be produced with given resources assuming above combinations. figure -1      Properties of slope of PPC: 1- Slope of PPC = loss of qn. of goodY                                      gain  of qn. of good X    2-PPC is concave. 3-PPC is downward left to right because to produce one unit of good-X we have to sacrifice some unit of good-Y   For more detail: please watch this video ,subscribe #vc official on youtube.

Solution to the central problem of an Economy in different economies. 1-In centrally planned economy: This is the economy in which social welfare is priority of economic agents so all economic decisions are taken by government or its authority .     a-What to produce- The government produce that good which is highly required by the society thus   social welfare is maximised , profit is ignored.      b-How to produce- Government uses labour intensive technique if there is unemployment in the  economy , if economy is in full employment level then government uses capital intensive technique  to   ensure to availability of low price goods in the economy.     c-For whom to produce- No doubt government produce for poor section of the society to maximise  social  welfare but growth is ignored. 2-In Market economy:  This is the economy in which profit maximisation is the priority of economic agents so all economic decisions are taken by  private  individuals.        a-What to produce- Privat

Central problem of an economy:  It is the problem which has to be faced to every economy whether the country is vibrant or stagnant, rich or poor, developed or backward because resources are limited and demand for resources is unlimited,resources have their alternative uses due to which problem of choice arises. It has three dimensions: 1-What to produce? 2-How to produce? 3-For whom to produce? 1-What to produce: This is the problem of choice of goods. It has also two dimensions.     a-What goods to be produced?     b-In what quantity goods to be produced? In every economy there are two types of goods, consumer goods (consumption goods like Icecream etc) and capital goods (producer goods like machines etc). If we put all resources to produce capital goods then our future will be good but currently we will suffer lack of consumer goods,and if we put all resources to produce consumer good then our present generation enjoy but our future generation will trouble. 2-How to produce: It is a

Economy: A geographical area known as an Economy where some people earn their living by performing different economic activities. Like A teacher teaches, Doctor treats patients,to satisfy own needs.         When people are less dependent to each other for their needs, is known as Simple Economy . But when the degree of dependence is high then it is called Complex Economy. At present we are living in complex economy, because our needs are very vast. Types of Economy 1-Centrally Planned Economy 2-Free or market Economy 3-Mixed Economy 1-Centrally planned Economy- These are those economy where maximum economic decisions are taken by some central authority or central government to keeping view in mind to maximize social welfare.Consumers are not sovereign in this economy. Public sector dominates the economy. Like Russia ,China(Before) Etc. (Economic decisions are mainly What to produce ,how to produce and for whom to produce) 2-Market or Free Economy:  These are those economy where maximum

  Positive and Normative Economics Positive Economics: It deals with Economic statement related to past, present or future . It deals with such economic situation which can be studied by using facts and figures thus it is verifiable in nature. Ex: Population of India is more than 120 crores. Normative Economics: It is the Economics of " What is ought to be". It deals with the opinions of Economists related to the Economic issues or problems. Different Economists may offer different opinions on the solution to an economic problem, thus it cannot be verified. Ex: Wage of a worker must be ₹1000/ per day. For more detail: please view this video ,subscribe #vc official on youtube.

  Economics : It is that branch of knowledge in which those activities of human beings are studied which they undertake to acquire scarce means to satisfy their unlimited wants. It is the rational management of scarce resources at optimum level. Resource is anything which is useful to satisfy the human wants,but it is technologically accessible,economically feasible and culturally acceptable. In Economics resources are means to production(Land,Labour , Capital, Entrepreneur). Characteristics of resources in Economics: 1- It is scarce in nature. Like land etc 2- It has alternative uses. Like we can use land for farming or living. 3-Human wants are unlimited for resources. Like we want enough land on which we can produce everything as well as we live comfortably. The above three factors leads to choice,thus scarcity and choice is the essence of Economics. Branches of Economics 1-Micro Economics 2-Macro Economics 1-Micro Economics: It is that branch of economics which deals with economic