THINK ABOUT CENTRAL PROBLEMS OF AN ECONOMY..!!

          CENTRAL PROBLEMS OF AN ECONOMY              

Hello friends ,today i came with the new blog on the topic of "Central Problem of an Economy"

which is a basic part of economics and due to this problems the economics subject is created to 

tackle it.So it is very important to understand about those problem which was influance to us 

to study economics.

INTRODUCTION

Due to unlimited wants and limited resources problem,problem of choice arises in the economy these problems are reffered as the central problem of economy.

Causes of central problems:

* Human wants are unlimited .

* Resources are limited in nature.

* Resources have alternative uses.

Types of central problems:

*What to produce:

The first basic problem with the economy is to decide what to produce and in what quantities. Resources are limited in nature so,the economy cannot produce all goods and services as per her wishes .So,under this problem an economy has to decide what to produce more capital good or more consumer goods , more luxurious goods or more necessities goods.

*HOW TO PRODUCE:

After deciding what to produce the next central problem with the economy is to decide how to produce.

There are two method of production:

* Labour intensive technique.

* Capital intensive technique.

* In labour intensive technique more employment opportunities are generated but there is less production.

*In capital intensive technique there is huge production but employment opportunities are less.

So,according to the availability of resources and given technology, an economy has to choose most appropriate method of production.

*FOR WHOM TO PRODUCE:

This central problem is basically related with the distribution of national income to different factors of production in the form of land to rent, profit to enterprenure ,intrest to capital.If the economy is decided to produce more of masses goods then national income will be distrabuted more equally to different section of society. On the other hand if the economy has decide to produce more luxurious good then national income is distrabuted more in the favour of richer section. So there will be unequal distribution of income.

conclusion

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THINK ABOUT PRODUCTION POSSIBILITY CURVES(PPC)....!!

PRODUCTION PO

SSIBILITY CURVE

INTRODUCTION OF PRODUCTION POSSIBILITY CURVES(PPC):

Hello friends , this is my second blog  and in this blog am going to sharing my knowledge about 

production possibility curves which is a part of economics. Production possibility curve represents

the data in graphical presentation about different possibilities of production of two commodities 

within limited resources. In other words , it shows the allocation of two commodities within limited 

resources.

DEFINITION / MEANING:

 "It is a locus of all the possible bundles of two goods that an economy can produce by using its technology fully and efficiently (without wastage of resources)".

SOME BASIC ASSUMPTIONS OF PPC:

1. Resources are given as constent.

2. technology are given as constent.

3. Resources are not specfic in nature.

FEATURES OF PRODUCTION POSSIBILITIES CURVES(PPC):

1. PPC is downward sloping curve 

reason:

Since resources are limited in nature so for increasing production of one commodity there is need 

sacrifice production of other commodity . Hence, PPC is downward sloping curve.

2. PPC is cocave to origin:

reasion:since, MOC is diminishing in nature so PPC is downward sloping curve (explaination of marginal opportunity cost will be explain in the conclusion .

SHIFT IN PPC:

1. Rightward shift in PPC/ outward shift in PPC :

1.when there will be upgradation in technology.

2.when there will be increase in resources.

2. Leftward shift in PPC/inward shift in ppc:

1. when there will be use of outdated technology.

2. when there will be loss of resources.

CONCLUSION:

MARGINAL OPPORTUNITY COST -  It is a cost or unit of next best alternative that has to be sacrifice for producing an additional unit of output. It is a difference between change in commodity x and commodity y.

  (REAL WAVES try to give you best content that make you satisfied  and in easy words which helps to understand you easily).                                                 

THINK ABOUT ECONOMICS...!!!

  Hello friends,this is my first blog and am intrested to sharing my knowledge about some basic terms of economics.I will start my blog which is my first by introduction of economics.

introduction

before starting with the introduction of economics we should must known about economy because economics is situated in the economy ." Economy is a system by which people of an area earn their living"and "ECONOMICS ","Economics is the subject matter that deals with the rational management of limited resources (in relation to unlimited wants) in such a manner so that an individual as well as economy gains are maximised.  

ECONOMICS ARE BROADLY CLASSIFIED INTO TO CATEGORIES :

1. Microeconomics 

2. Macroeconomics                                           

so, lets firstly talk about Microeconomics "Microeconomics is a branch of economics that deals with the economics behaviour of an individual or a group individuals". Its main subject area is product pricing or factor pricing and it is also known as "price theory".Such elements of this are production possibility curve and elasticity of demands. 

                                                                                                 And our last term is Macroeconomics"Macroeconomics is a branch of economics that deals with the economics behaviour of an aggregate or economy as a whole. Its main subject area is to determine national income or aggregate outp//ut.It is also known as "income theory.Such elements of this are gross domestic product(GDP)and national income. 

THANKYOU