II PUC Economics. ; Micro Economics Chapter 1 – Introduction ; Karnataka PU Board

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This video discusses about II PUC Economics. ; Micro Economics Chapter 1 – Introduction

Notes:

INTRODUCTION
1.1 Simple Economy
 People in the society need many goods and services in their everyday life
 Eg. Food , clothing , shelter , transportation etc and services like teachers ,doctors etc
 No individual society has all the things needed
 Each unit in society can produce some goods or services by using the resources that it has and use part of the produce to obtain many other goods and services
 No individual has unlimited resources compared to their needs
 So they have to make a choice between goods and services
 Because of scarcity of resources they have to use the limited resources in best possible way
 Just as the resources of an individual are scarce, the resources of society are also scarce in comparison to what the people in society might collectively want to have
 This resources have to be allocated properly in the production of different goods and services keeping with the likes and dislikes of people
 The allocation of the limited resources and distribution of final mix of goods and services are two of the basic economic problem faced by the society

1.2 Central problems of an economy
 The basic economic activity of life are production , exchange and consumption of goods and services
 Every society faces scarcity of resources and this gives rise to the problem of choice
 The problems of an economy are summarised as follows
 What is produced and in what quantities
 Every society must decide on how much of each of the many possible goods and services it will produce
 Whether to produce most food , clothing , luxury goods etc
 Whether to use more resources in education, health or military etc [ problem of choice ]
 How are these goods produced
 Every society has to decide on how much of which resources to use in the production of each different goods and services
 Which available technology to use in production to use more labour or machine[ problem of technology ]
 For whom are these goods produced
 How should the produce of economy distributed among the individual in economy
 Who gets more and more get less [problem of distribution]
 That every economy face the problem of what to produce , how to produce and for whom to produce
 Production possibility Frontier
 Resources of an economy as a whole are always limited in comparison to what the people in economy collectively want to have
 Scarce resources have alternative uses
 Society should decide on how much of each of these resources to be used in production of different goods and services
 This allocation gives rise to a particular combination of different goods and services
 Total amount of resources can be allocated in many ways
 The collection of all possible combination of goods and services that can be produced from a given amount of resources and given stock of technological knowledge is called the production possibility set of the economy
 An economy which can produce corn or cotton by using its resources ,uses different combination when resources are utilised
 Any point on or below the curve represents a combination of corn and cotton that can be produced with the economy's resources
 This curve is called production possibility curve
 If we have more of one good, we will have less of the other
 A cost of having a little more of one good in terms of the amount of other good that has to be for gone is opportunity cost or economic cost of an additional unit of goods

Karnataka State Syllabus, II PUC, Economics, Learning History Made Easy, India Political Science, Education

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