Types of Economics:- Economics has two types
1) Microeconomics:- It deals with the study of individuals and smaller business level economy eg:- Consumers demand , price of milk, market level business etc.
2) Macro economics :- It deals with this study of whole economy like state level and national level economy, for example, GDP, inflation, unemployment e t c.
> Economy is generally a system in which the pupils reduce the distribute and consume the goods and services to make their lives better and comfortable.
OTHER TYPES OF ECONOMY: Apart from this above 2 types of economics, there are also 3 types of economy , based on which sector control that particular economy of that particular this country or nation.
1) Capitalist Economy:- It is that economy in which only the private sectors control the entire economy of the country. For example, the economy that runs in the United States of America is of capitalist economy.
2) Socialist Economy:- When it comes to the socialist economy, it is that type of economy where only the government sector control the economy of the nation. For example , the economy that runs in north korea is of socialist economy
3) Mixed Economy :- If we talk about the mixed economy, it is the economy where both private and the government sector invests control the economy of the country. It is the economy that is present in india.
GOODS and SERVICES: Now to understand that what actually the the economy is for, we should have to understand the actual meaning of goods and services to understand the economy more better.
1] Goods :- Goods are the physical items that we touch, we feel and we use in our daily life. For example , food, clothes, etc.
2] Services:- Services are generally the activities that helps in the development and making easy life of people , for example , transport, education[Teaching], health[Treatment], etc.
>> If the resources are limited and demands, needs and wants are unlimited that particular condition is called Scarcity.
>> Opportunity Cost :- It is possible condition where next best alternative is possible to buy that is given up. Eg:- if you spend 300 for buying a pizza, then you can't buy books at Rs. 300.
📘 Demand and Supply Analysis
🔹 Demand:> Demand is the quantity of a good or service that consumers are willing and able to buy at a certain price.
Law of Demand:- If price increases, demand decreases (and vice versa).
Demand Curve: Downward sloping.
🔹 Factors Affecting Demand:
1. Price of the product
2. Income of buyers
3. Prices of related goods (complementary/substitute)
4. Tastes and preferences
5. Future expectations
🔹 Types of Goods:
Normal Goods: Demand ↑ when income ↑ (e.g., fruits).
Inferior Goods: Demand ↓ when income ↑ (e.g., cheap rice).
Substitute Goods: Tea vs Coffee.
Complementary Goods: Pen and Ink.
🔹 Supply:
> Supply is the quantity of a good or service that producers are willing and able to offer for sale at a certain price.
Law of Supply:
> If price increases, supply increases (and vice versa).
Supply Curve: Upward sloping.
🔹 Factors Affecting Supply:
1. Price of the product
2. Cost of production
3. Technology
4. Government policy (taxes/subsidies)
5. Natural conditions
📘 3. Demand and Supply Behavior (Market Equilibrium)
🔹 Market Equilibrium:
> The point where demand equals supply. No shortage, no surplus.
Equilibrium Price: Price at which demand = supply.
Equilibrium Quantity: Quantity bought/sold at that price.
🔹 Surplus and Shortage:
Surplus: Supply > Demand → Prices fall
Shortage: Demand > Supply → Prices rise
🔹 Shifts in Demand/Supply:
Right shift in demand = More demand → Price ↑
Left shift in demand = Less demand → Price ↓
Right shift in supply = More supply → Price ↓
Left shift in supply = Less supply → Price ↑
🔹 Elasticity of Demand:> Measures how much demand changes when price or income changes.
Elastic: Demand changes a lot.
Inelastic: Demand changes very little.
Production: The process of creating goods and services using inputs like land, labor, and capital.
Problem of Growth: The challenge of increasing economic output over time despite limited resources.
Public vs Private Goods: Public goods are non-excludable and available to all (e.g., roads); private goods are consumed individually and can be excluded (e.g., a shirt).
Merit Goods: Socially beneficial goods that may be under-consumed if left to the market (e.g., healthcare, education).
Production Possibility Curve (PPC): A curve showing the maximum combinations of two goods that can be produced with given resources and technology.
Resource Allocation in Mixed Economy: In a mixed economy, resources are allocated through both market prices and government planning to achieve efficiency and welfare.
Economic Methodology: A structured approach using models and reasoning to study economic behavior and outcomes.
Inductive Reasoning: Developing general economic principles based on observation and data.
Deductive Reasoning: Applying general principles to specific cases to draw logical conclusions.
Equilibrium: A state where opposing economic forces, such as demand and supply, are balanced.
Positive Economics: Deals with objective analysis and facts—what is.
Normative Economics: Involves value-based judgments—what ought to be.
Stock: A quantity measured at a specific point in time (e.g., money in bank).
Flow: A quantity measured over a period of time (e.g., income per month).
Statics: Economic analysis at a fixed point in time without considering time-based changes.
Dynamics: Analysis of economic variables over time, considering changes and trends.
Change in Quantity Demanded: Movement along the demand curve due to price change.
Change in Demand: Shift of the entire demand curve due to changes in income, preferences, or other factors.
Exceptions to Law of Supply: Cases where higher prices do not lead to higher supply, such as labor beyond a certain wage level.
Elasticity of Demand: Measures how much the quantity demanded changes with a change in price.
Elasticity of Supply: Measures how much the quantity supplied responds to a change in price.
Determinants of Elasticity of Supply: Include time period, availability of inputs, production flexibility, and storage capacity.
Rationing and Allocation of Scarce Goods: Government intervention to ensure fair distribution of limited resources, often through quotas.
Price Support Measures: Government sets a minimum price to protect producers, like Minimum Support Price (MSP).
Minimum Wage Legislation: A legal minimum wage set by the government to protect workers from exploitation.
Arbitrage: Buying a product in a low-price market and selling it in a high-price market to earn profit.
Sharing of Tax Burden: The distribution of tax between buyers and sellers depending on the elasticity of demand and supply.
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EDUCATIONAL LEARNING KNOWLEDGE (MAM)
