Richa

Coaching
Classes
Microeconomics
Microeconomics- Study of individual unit

Microeconomics- Study of whole economy

Economy- System of all economic activities and

types of economies are-Capitalism/socialism and Mixed

Capitalism/Free/Laissez Faire – No Govt interference/Dominance of Pvt Sector

Socialism/Controlled/Centrally Planned – Govt Control/less or no importance to Pvt sector

Mixed Economy- Contribution of both Pvt and Public sector

Economic Activities - That are done to earn money
Non Economic Activities - That are not done to earn money but for social or emotional reasons
Economics is Science-As it is systematic study and analysis of cause and effect of a problem
Economics is Art-As it requires persistent practice
Central Problems of Economy-
What to produce? How to produce? For whom to produce?
Production Possibility Curve- Graphical relation of two commodities that can be produced with given resources
Opportunity Cost- Best alternative foregone
Utility- Satisfaction that a consumer receives on consuming a commodity

Cardinal apporoach says Utils can be measured

but

Ordinal approach says utils can not be measured , they can be ranked only
Law of Diminishing Marginal utilty-

The more a person consumes the less he is going to get utils

Consumer’s Equilibrium – a state when utils obtained from a commodity are equal to the money spent by
him on the commodity
Indifference Curve- A graph showing several combinations of
two commodities when every combination is giving equal utils
Budget Sets- All possible combinations of two commodities that can be purchased with given money
and when these sets are shown on a graph that is Budget Line
Demand- Quantity of commodity that a customer is willing and
able to buy at given price and given time
Price Demand- Relation between Price and Demand

Income Demand- Relation between Income and Demand

Cross Demand- Relation between Price of one commodity and Demand of another commodity
Demand Schedule-Tabular presentation of relation between Price and Demand

Demand Curve- Graphical Presentation of relation between Price and Demand

Law of Demand- Price and Demand have inverse relation
Elasticity of Demand – This is quantitative relation between Price and Demand
Production Function- It is a relation between input and output
Revenues– Money received on sale of goods or provision of
services
Producer’s equilibrium – A state when profit of a manufacturer is highest
Stock -It refers to the total quantity of goods which is available
with the sellers in the market at a particular point of time.

Supply -Supply refers to the quantity of a commodity that a firm

is willing and able to offer for sale at a given price during a
given period of time
Market – A relation between Seller and Buyer/It is not a place
but an activity

Perfect Competition – When there are several sellers and

customers have great choice

Imperfect Competition- When customers do not have much

choice

Types of Imperfect Competition –

Monopoly – Only one seller Duopoly – Two seller
Oligopoly- a few sellers