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