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What To Produce

Chapter 1 of the microeconomics document discusses the concept of scarcity and the economic problem of making choices due to unlimited human wants and limited resources. It outlines different types of economies: market, planned, and mixed, each with distinct decision-making processes and objectives. The chapter also addresses key economic questions such as what to produce, how to produce, and for whom to produce, highlighting the trade-offs between social equality and economic growth.

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18 views3 pages

What To Produce

Chapter 1 of the microeconomics document discusses the concept of scarcity and the economic problem of making choices due to unlimited human wants and limited resources. It outlines different types of economies: market, planned, and mixed, each with distinct decision-making processes and objectives. The chapter also addresses key economic questions such as what to produce, how to produce, and for whom to produce, highlighting the trade-offs between social equality and economic growth.

Uploaded by

payaljoshieducation
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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[Document Title]

Chapter 1 microeconomics

PAYAL JOSHI
CLASS XI
Scarcity
It refers to a situation where demand for resources is greater than availability of
resources even at zero price level.

Economic Problem
Problem of making choices is the main economic problem
Causes of arising economic problem
◦ Human wants are unlimited
◦ Resources are limited
◦ Resources have alternative uses

Economy
• It refers to the area where people live and earn.

Types of economy
◦ Market economy / capitalistic economy / free-market economy /entrepreneur
economy/ laissez-faire economy
Planned economy
◦ Mixed economy

Market Economy
 It refers to the economy where all economic decisions are taken by the market.
 . Economic problems are solved by the market forces of demand and supply.
This is called price mechanism
 Its main motive is profit maximisation.
For example :- USA, JAPAN etc.

Planned Economy
 It refers to the economy where all economic decisions are taken by the central
government
 Economic problems are solved by the centrally planned authority.
 Its main motive is social welfare.
For example :- China, Russia etc.

Mixed Economy
 It refers to the economy where economic decisions are taken by both market
and government.
 Economic problems are solved by both market and government.
 Its motives are both profit maximisation and social welfare.
For example :- India

Economic activities are those activities which related with earning money.

For example :- teachers teaching in school doctors attending patients etc.


Non-Economic activities are those activities which are not related with money.
For example :- religious activities, social activities etc.

What to produce ?
◦ It refers to the problem of making choice of the good to be produced in an
economy
◦ There are millions of goods to be produced in an economy.
◦ For example:-
1 capital goods like machinery, tractor etc.
2 consumer goods like toothpaste, sugar etc.
3 war time goods like gun, bomb etc.

Once the selection about the goods to be produced is made then next problem arise
of How much to be produced?.

How to produce?
It refers to the problem of choice related to production technology.
There are two types of production technology :
◦ labour intensive technology
◦ capital intensive technology

Labour intensive technology refers to the production technic where more labour and
less capital is used.
Capital intensive technology refers to the production technic where more capital less
labour is used.

For whom to produce?


◦ This problem is related with the choice between social equality and GDP
growth.
◦ If goods are produced for poor, social equality will increase.

If expensive goods are produced , GDP will increase.

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