simple and knowledgeable

1. ECONOMICSECONOMICS
PROJECTPROJECT

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. ECONOMICS
MICRO ECONOMICS MACRO ECONOMICS

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. 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. 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. 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. 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. 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.  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. 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. 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. 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.  PRODUCTION POSSIBILITY FRONTIERPRODUCTION POSSIBILITY FRONTIER
OROR
PRODUCTION POSSIBILITY CURVEPRODUCTION POSSIBILITY CURVE

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. 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. PPF CurvePPF Curve
Concave shape
0
y
x

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.