Class 11 Economic Notes | PDF Download for Chapter 1 Introduction to Microeconomic By Edurankers

Class 11 Economic Notes | PDF Download for Chapter 1 Introduction to Microeconomic By Edurankers   

Class 11 Economics Notes for Introductory Microeconomics.
Students who are ambitious to qualify the Class 11 with good grades can check Notes. 

Below we are providing class 11economics notes PDF to access the Notes of Class 11 Economics for the topic Introductory Microeconomic.

Introductory Microeconomic

How many types of economics?

Study to economics is divided into two branches:-

(a) Micro Economics.

(b) Macro Economics. 

(a) Micro Economics:- it is the branch of economics which deals with the behavior of individual in economics units of economic such as individual or households.

(b) Macro Economics:- Macroeconomics is that branch of economics that deals behavior of the economy as a whole. It is the study of aggregates such as national income, full employment,  aggregate consumption, etc.

Discuss the central problems of an economy?

Every economy faces three Central problems due to multiplicity of wants, scarce availability of resources, and problems of choice. This scarcity challenges the best possible usage of these available resources to fulfill the unlimited demands. The three central problems of an economy are as follows.

(a) Problems of allocation of resources.

(b) Problems of fuller and efficient utilization of resources.

(c) Problem of growth of resources.

(a) Problem of allocation of resources:- 

Every economy has limited resources that can alternatively be used for producing different goods and services. Every economy faces three problems which we call allocation of resources.

(i) What to produce and in what quantities?

It is the problem of choosing the different items of goods and the quantities to produce with the available resources.

The very first problem encountered by any economy is to decide what goods are to be produced and in what quantities or amount with the limited resources.

(ii) How to Produce?

This problem relates to the choice of technique i.e, labor-intensive or capital-intensive. For Example:- production of cloth is possible either by handloom or by the use of modern machines.

(iii) For whom to produce?

This problem refers to the selection of categories of people who will ultimately consume the goods i.e, the distribution of final goods and services.

It is the problem of deciding whether to produce for low-income groups or high-income groups. It depends on the level and distribution of income and wealth.

(b) Problems of fuller and efficient utilization of resources:- 

The next problem with the economy is how to use? its limited resources i.e, land, labor, capital, and other resources so that maximum production at the least cost can be produced.

(c) Problems of growth of resources:- 

The growth of resources has become a basic problem as the resources are scarce and they will have the possibility of being exhausted a continuous use. This objective can be achieved by Technical Advancement. Besides fuller utilization, these countries should try to raise their productive capacities by exploring further availability of resources and discovering better techniques for their use.

What do you mean by the production possibilities of an economy?

So, let us understand what is production possibilities of an economy? Production possibilities of an economy imply those numerous alternative combinations of goods and services, which a particular economy can produce, with the given technology and employing the available resources fully and efficiently. this is called productions.

What is Production Possibility Frontier (PPF)?

The Production Possibility Frontier (PPF) refers to a curve that shows the various alternative combination of two goods. that can be produced with efficient utilization of the given resources and technology. It is also called the production possibility curve (PPC).

There are consumption are:- 

(i) Productive resources are given in an economy.

(ii) All resources are fully employed and efficiently utilized.

(iii) Techniques of production are given and do not change.

(iv) The resources are not equally efficient in the production of all products.

Discuss the subject matter of economics?

The subject matter of Economics is subdivided into two core branches, Micro Economics and Macro Economics this division came into existence only after 1930 as per the suggestion by Ragnor Frisch.

[ The domain of interest of these two branches of economics can be presented as ]

The subject matter of economics is microeconomic and macroeconomic.

●  Micro Economic:-  It is the study of individual economic units, i.e, the behavior of consumers and firms. The study of how they utilize the given resources in the best possible manner to maximize their rational objectives falls under the domain of microeconomics. 

           

             It is also the study of demand and supply and how their interaction determines the prices of various goods and services. microeconomics helps in solving the three central problems of an economy. It is also called the price theory as it primarily focuses on how prices are determined both in commodity and factor markets.

● Macro Economics:- We study how the economy as a whole operates. It focuses on the determination of the aggregate measures, like aggregate demand, aggregate supply, and overall price level, and how they changed over time. It is also known as Lenoun as the theory of income and employment as its main focus is on how income and employment levels are determined. Macro Economics helps in understanding and solving problems like inflation, unemployment, Balance Of Payment (BOP), poverty, etc.

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What do you understand by normative economics analysis?

Normative economic analysis refers to the analysis in which we study whether a particular mechanism is desirable or not. In this analysis, we study what ought to be the desired situation or in what way the economic problems be solved. An example of a normative statement could be, the central government should not stop providing minimum support prices to the farmers.

What do you understand by positive economic analysis?

Positive economic analysis refers to the analysis in which we study what or how an economic problem is solved by analyzing various positive statements and describe what was, what is and what would be. These statements can be tested proven or disproven and do not involve personal value judgments. For example, someone, says that it is raining outside then the truth of these statements can be verified. It deals with the actual realistic situation.

Distinguish between a centrally planned economy and a market economy?

(a) Based on ownership of factor of production :

Centrally planned economy:- 

A factor of production are publicly owned I.e, publically ownership

Market Economy:- Factor of production are privately owned

(b) Based on production motive :

Centrally planned economy:- The motive of production is social welfare.

Market Economy: -The main motive is profit-making.

(c) Based on governing factor :

Centrally planned economy:- The production is governed by planning mechanisms i.e, according to the government plans.

Market Economy:- The production is governed by price mechanisms i.e, by demand and supply.

(d) Based on income distribution :

Centrally planned economy:- The degree of equality of income is low.

Market Economy:- The existing unequal distribution of income.

(e) Based on government rule :

Centrally planned economy:- The main role is played by the government to distribution.

Market Economy:- The main role is played by private players. They decide what to produce while the role of a government is limited to maintaining law and order in the nation.

Distinguish between microeconomics and macroeconomics?

(a) Based on study matters :

Microeconomic:- It studies individual economics units like households, firms consumers, etc.

Macroeconomic:- It studies an economy as a whole.

(b) Based on with deals :

Microeconomic:- It deals with how consumer or producers make their decisions depending on their given budget and other variables.

Macroeconomic:- It deals with how different economic sector such as households, Industries government, and foreign sector make their decision.

(c) Based on method :

Microeconomic:- It is the method of portal equilibrium that is equilibrium one market.

Macroeconomic:- It uses the method of general equilibrium in all markets of an economy as a whole.

(d) Based on variables :

Microeconomic:- The major microeconomic variables are price, individual consumer demand, and wages, rent, profit, etc.

Macroeconomic:- The major macroeconomic variables are aggregate price, aggregate demand aggregate supply, inflation, and unemployment, etc.

Conclusion:

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