MICRO-ECONOMICS: 1- INTRODUCTION

CENTRAL ECONOMICY MARKET ECONOMICY

1) In a central economic the major
destitution regarding the exchange,
production and consumption of goods
and services are taken by the
government. Even they have many
producing unities that are controlled by
the government.
2) Example: China
1) In a market economy all the major
destitution regarding the exchange,
production and consumption of goods
and services are taken by the market.
2) Market is a organisation where
individuals can interact and exchange
goods and services freely with each
other in return their produce.
3) Example: Online, on calls, in a physical
market etc.

Key Words:

1) Consumption: the processes of excepting the final good or services and using it to full fill our
needs.

2) Production: the process of converting a raw material into finished goods for use this applies
in service providing sector as well.

3) Exchange: the processes of sharing of goods or providing the services to the society in return
of getting profit e.g., money or wages to full fill our needs.

4) Scarcity: unavailability or shortage of resources when needed.

5) Production possibilities: The processes of making groups of goods that can be produced in
the scarce resources available. Example when a farmer has 1 acre of land and he has to grow
corn and cotton on the same time so he make a destitution of growing 50% of cotton and
50% of corn or 10% cotton and 90% corn etc therefore the groups of choices the farmer
made is called production possibilities.

6) Opportunity cost: the processes in which an individual is supposed to make a choice

amongst the goods and services available in the market according to their wants during the
time when they have limited resources to full fill their wants and the good or service is left by
the individual in these processes is the opportunity cost.

4) Market economy: In a market economy all the major destitution regarding the exchange,
production and consumption of goods and services are taken by the market. Market is an
organisation where individuals can interact and exchange goods and services freely with
each other in return their produce.
7) Centrally planned economy: In a central economic the major destitution regarding the
exchange, production and consumption of goods and services are taken by the government.
Even they have many producing unities that are controlled by the government.

8) Mixed economy: In a mixed economic the dictions are taken by both government and
market and the production and supply of goods and services is given by both government
and market. However, the majority of control on goods and services might be tilted towards
any one party.

9) Positive analysis: talks about the policies that can be made to solve economic problems in
the society.

10) Normative analysis: talks about the out come that the policies give while functioning
weather good or bad.

11) Microeconomics: Economics that focusses on a small aspect or part in the society.

12) Macroeconomics: Economics that focuses on a hole or large part in the society.