Economics Class 12 Revision Notes Microeconomics Chapter 1 Introduction

Points to Remember
1. Economy
Economy refers to the nature and level of economic activities in an area. It shows how the people of the concerned area earn their living.

2.Types of Economy
(i)Market economies are those economies, in which economic activities are left to the free play of the market forces.
(ii)Centrally planned economies are those economies where the course of economic activities is dictated or decided by some central authority or by the government.
(iii)Mixed economies share the characteristics of both market and centrally planned economies.

3. Central Problems of Economy at the Micro Level
(i) What to produce?
(ii) How to produce? or Choice of technique of production.
(iii) For whom to produce? or Resources of allocation.

Economics is defined as the allocation of scarce resources in such a manner that our economic welfare is maximised.
5.Branches of Economics
(i)Micro Economics
It studies the economic issues of an individual unit like an individual consumer, an individual producer etc.
(ii)Macro Economics
It studies the economic issues at the level of an economy as a whole live total employment of resources, total national product etc.
(Production Possibility Curve) It shows different combinations of two goods, which can be produced with given resources and technology

7.Opportunity Cost
It is the value of a factor in its next best alternative use.

8.Marginal Opportunity Cost
The rate at which output in use-1 is lost for every additional unit of output in use-2 ecnomics-class-12-revision-notes-microecnomics-chapter-1-intoduction-01implies marginal opportunity cost.