Professional Documents
Culture Documents
Introduction to
Economics
Economy. . .
Similarly …
An economy has to make many
decisions:
● What goods and how many of them should
be produced?
● What resources should be used in
production?
● Where to set up production plants?
● What market segments to cater?
● At what price should the goods be sold?
Society and Scarce Resources:
Scarcity
● Unemployment …
● Inflation…
● Unsold Inventory…
● Under-utilised Production Capacity…
Economists study. . .
● Pursuing MBA?
Rs.
Consumer
expenditure
The circular flow of goods and incomes
Goods and services
Rs.
Consumer
expenditure
Rs.
Consumer
expenditure
Wages, rent
dividends, etc.
Rs.
⇩Inflation ⇨ ⇧Unemployment
It’s a short-run tradeoff!
Summary