Micro Economics

MICRO ECONOMICS

PREPARED BY MD. RAHMAN RAHED rahmanrahed@gmail.com

PREPARED BY RAHMAN RAHED rahmanrahed@gmail.com

CHAPTER: INTODUCTION Q.WHAT IS CENTRAL ECONOMIC PROBLEM? ANS: Every country in the world has some common economic problems. These common economic problems are known as central economic problems. Problems are due to scarcity of resources. Q. WHY DO ALL COUNTRIES OF THE WORLD FACE THE PROBLEMS? ANS: All the countries in the world face the central economic problem due to scarcity of resources. Q. WHAT IS PPC? ANS: Production Possibility Curve (PPC) is one, the different points of which show different combinations of two commodities which can be produced with same amount of resource.

1. What to produce in what quantityIt is the number one central economic problem. As the resource are limited so decision about production of goods and services is to be taken properly otherwise demand for goods and services cannot be fulfilled and people may suffer. Decision about production or choice of production of goods and services in face of limited resources is very vital and it is considered as vital problem for a country. 2. How to produce (selection of process) - How to produce refers to selection of methods or techniques of production for producing goods and services. If selection of techniques of production is not appropriate, under such case, cost of production will be unnecessarily high and people will have to pay high prices for the commodity. There are two techniques of production; labor intensive and capital intensive. Whether labor intensive or capital intensive followed, decision must be taken. 3. For whom to produce- That means distribution of services and goods among people living within the country. Q. WHAT IS ECONOMIC SYSTEM? ANS: Rules and regulation that are followed for running productive or economic activities are considered as Economic System. There are three types of economic system1. Capitalism 2. Socialism 3. Mixed economy

Fig: PPC...