Introduction to Microeconomics

Objective of the Subject

• Start of a new series on microeconomics
• Suitable for all types of students

Meaning of Microeconomics

• Analysis of individual problems
• Limited availability of resources and excess demand

Meaning of Scarcity

• Limited availability of resources
• Excess demand but lack of resources

Resources

• Resources are used to fulfill daily needs
• Resources have limited and alternative uses

Problem of Choice

• Scarcity leads to choice problems
• Optimal and correct use of resources

Three Central Problems of Economics

What to Produce

• Choice between consumer and producer goods
• Decision on production according to the country's situation

How to Produce

• Use of labor-intensive and capital-intensive techniques
• Selection of technique according to the scale of production

Whom to Produce

• Objective of production (poor and rich)
• Balance according to a mixed economy

Price Mechanism

• Pricing based on the balance of demand and supply

Production Possibility Curve (PPC)

• Different combinations of limited resource use
• Formation of a concave to origin curve

Properties of PPC

• Downward sloping
• Concave to origin
• Increasing marginal rate of transformation

Opportunity Cost

• Price foregone for the next best alternative

Rotation and Shift

• Rotation due to change in one resource or technique
• Shift due to changes in both

Types of Combinations

• Attainable and unattainable combinations
• Combination determination according to complete and incomplete use

To get the notes PDF, send a message to the provided contact number.