Summary

• Economics is a study of how people use their limited resources to satisfy their unlimited needs and desires . 
• A positive statement is to deal with the question of what is and no indication of approval or disapproval . 
• A normative statement is to deal with the question of what ought to be 
• Microeconomics analyzes the specific economic units in details such as households , firms and government . 
• Macroeconomics analyzes the aggregates behaviour of the entire economy such as inflation , unemployment and national income . 
• Scarcity can be defined as human wants are always greater than the available resources . 
• Factoes of production are the basic resources used in production process in order to produce economic goods and services . 
• Opportunity cost is defined as second best alternative that has to forgo for another choice which gives more satisfaction . 
• Production possibilities curve ( PPC ) shows the various possible combinations of goods and services produced within a specified time period with given technmology and resources . 
• Points lying inside the PPC indicate inefficiency and waste of resources . 
• Points which lie outside the PPC are unattainable and shows the concept of scarcity . 
• Points along the PPC are maximum amounts of output attainable and efficient which indicate choices . 
• Movements from one point to another point illustrates the concept of opportunity cost . 
• Shifts of the PPC happen when there are improvements in technologies , increase in resources and growth in economy . 
• The question of what to produce depeneds on the types of goods and services to produce and the quantities . 
• The question of how to produce goods and services depends on the cheapest method of production . 
• The question of for whom to produce depends on the distribution of income . 
• Economic system is a way in which an economy is organized to answer basic economic questions . 
• A market economy or capitalism is an economic system where individuals without government intervention take all the main economics decisions . 
• Planned economy or socialism is an economic systemw where all the economic decisions are made by the government or central authority . 
• Mixed economy is an economic system which has a mixture of capitalism and socialism systems to solve basic economic problems .