JITHIN SAJU

1. Discuss the various economic indicators.

An economic indicator is a piece of economic data, usually of macroeconomic

scale, that is used by analysts to interpret current or future investment
possibilities. These indicators also help to judge the overall health of an
economy.

Economic indicators can be anything the investor chooses, but specific pieces of
data released by the government and non-profit organizations have become
widely followed. Such indicators include but aren't limited to:

i) Leading indicators such as the yield curve, consumer durables, net

business formations, and share prices, are used to predict the future movements
of an economy. The numbers or data on these financial guideposts will move or
change before the economy, thus their category's name. Consideration of the
information from these indicators must be taken with a grain of salt, as they can
be incorrect.

ii) Coincident indicators, which include such things as GDP, employment

levels, and retail sales, are seen with the occurrence of specific economic
activities. This class of metrics shows the activity of a particular area or region.
Many policymakers and economists follow this real-time data.

iii) Lagging indicators, such as gross national product (GNP), CPI,

unemployment rates, and interest rates, are only seen after a specific economic
activity occurs. As the name implies, these data sets show information after the
event has happened. This trailing indicator is a technical indicator that comes
after large economic shifts.

2. Talk about economies of scale.

Economies of scale occurs when more units of a good or service can be

produced on a larger scale with fewer input costs. Diseconomies of scale can
also exist, which occurs when inefficiencies exist within the firm or industry,
resulting in rising average costs. There are 2 types of economies of scale.
They are:

i) Internal economies of scale: Internal economies of scale measure a

company's efficiency of production and occur because of factors
controlled by its management team. Types of internal economies of
scales are labour, technical, managerial, financial and welfare economies
of scale.
 ii) External economies of scale: External economies of scale happen
because of larger changes within the industry, so when the industry
grows, the average costs of business drop. Types of external economies
of scales are economies of information, economies of concentration,
economies of research and development and welfare economies.

3. What do you mean by opportunity cost in the study of economics?

Opportunity costs represent the potential benefits an individual,

investor, or business misses out on when choosing one alternative
over another. Considering the value of opportunity costs can guide
individuals and organizations to more profitable decision-making.

4. Discuss about Externalities of Production and Consumption.

1) Positive Externality in Consumption: An example of this

is vaccination. The welfare of any person in a particular
neighbourhood depends not only on whether he is
vaccinated but also on whether the people in the said
neighbourhood have been vaccinated so that the
contagious diseases are not spread.

2) Negative Externality in Consumption: The welfare of any

person in a particular neighbourhood depends not only on
his avoidance of riding a noisy motorcycle but also on
other people’s avoidance of doing this.

3) Positive Externality in Production: The example which is

often cited here is that of the production of honey.
Beekeepers try to put their beehives on farms because
nectar from the plants increases the production of honey.
The farmers also receive advantages from the beehives
because the bees help pollinate the plants.

4) Negative Externality in Production: A very suitable

example is that of a paper mill that produces paper and
the waste is dumped into a river. The riverside residents
and the fish are hurt by the waste.
5. Draw and explain a PPF Curve on a national scale with the help of
an example.

 Imagine a national economy that can produce only two things: Apple and
Orange. According to the PPF, points A, B, and C on the PPF curve
represent the most efficient use of resources by the economy.
 For instance, producing five units of Apple and five units of Orange
(point B) is just as desirable as producing three units of Apple and seven
units of Orange.
 Point X represents an inefficient use of resources, while point Y
represents a goal that the economy simply cannot attain with its present
levels of resources.