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Introduction to Economics

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  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 econ...
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Rotation of Production possibility curve

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 Rotation of Production possibility curve: PPC can rotate in following circumstances. 1-Improvement in the technology in the favour of good -X : If there is an improvement in the technology in favour of goods -X then the production of goods-X raise on that the particular resources but production of goods-Y remains the unchanged accordingly PPC rotates. Fig-6 Before the improvement in technology in the favour of goods-X the PPC is ab but after improvement it rotates and be ac. 2-Improvement in the technology in the favour of good -X :  If there is an improvement in the technology in favour of goods -Y then the production of goods-Y raise on that the particular resource but production of goods-X remains the unchanged accordingly PPC rotates. Fig-7 Before the improvement in technology in the favour of goods-Y the PPC is  ab  but after improvement it rotates and be  ac. Note: If any technical improvement done in favour of both goods then PPC will shift, not rotate....
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Law of diminishing marginal utility

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 Law of diminishing marginal utility : It states that when more and more unit of commodity are consumed MU derived from every additional unit must decline. This is also called fundamental law of satisfaction. Assumptions of the law: 1- Standard basket of the commodity should be consumed. 2- Consumption must be continuous. Example: An individual can buy a slice of Pizza at 20 Rs;he is quite hungry and decides to buy five slices of Pizza. After doing so,the individual consumes the first slice of Pizza and gains a certain positive utility from eating the food. Because the individual was hungry and this is the first food he consumed,the first slice of Pizza has a high benefit.Upon consuming the second slice of Pizza,the individual's hunger is becoming satisfied.He wasn't hungry as before,so the second slice of Pizza had a smaller benefit and enjoyment as the first.The third slice,as before,holds even less utility as the individual is now not hungry anymore. hence MU declined by eve...
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