🧠 1. What is Economics? 😓 3.
The Economic Problem 1
The main economic problem is the problem of
Economics is the study of how people choose to use choice due to scarce resources that have
limited resources to satisfy their unlimited wants. alternative uses.
📢 Causes of Economic Problem
It is divided into two main branches:
🔹 Microeconomics 🔹 Unlimited Human Wants ♾️
🔹 Limited Resources 🛠️
Deals with individual economic units such as:
🔹 Alternative Uses of Resources 🔄
🧍
💡 4. Central Problems of an
● Consumers
● Producers 🏭
Markets 🛒
Economy
●
Central What It Means Explained
👉 Also called Price Theory 📊 Problem By
📌 Examples:
🤔
What to Which goods/services Price
● Consumer Equilibrium 👩 🛍️ produce & how much? Theory
● Producer Equilibrium 🏗️ produce 🛠️
How to Which technique? Theory of
Labour vs Capital Production
● Product & Factor Pricing 💰
Intensive?
For whom Who will consume? Theory of
🎯
to produce How is wealth Distributio
🔹 Macroeconomics
distributed? n
👉
Deals with the whole economy as a unit
📌
🌍
Also called Theory of Income & Employment 📈 ⚖️ 5. Opportunity Cost (OC)
Examples:
💬 Definition: It is the next best alternative
💸
🧮 It helps in taking the best possible decision when
● National Income foregone when a choice is made.
● Inflation 🔥 resources are scarce.
● Aggregate Demand & Supply 📉📈 🔁 Marginal Opportunity Cost (MOC) / MRT
👉 Cost of producing 1 extra unit of a good in terms
of units sacrificed of the other good.
🌐 2. What is an Economy? 📌 Formula:
An economy is a system in which people earn their
living by producing, consuming, investing, and
exchanging goods & services.
Prepared by Rahul Garg | Class XI – Microeconomics: Introduction
📈 6. Production Possibility 2
Frontier (PPF)
PPF is a curve showing different combinations of two
📊
goods which can be produced using available
resources & technology
🧮 Examples of Opportunity Cost
1. Mohan using train vs car 🚂🚗
👉
Train cost = ₹350, Car saving = ₹275
✅ Features of PPF OC = ₹350 – ₹275 = ₹75/month
1. Downward Sloping ↘️
2. Ruth not training workers 👩💼
Without training = ₹39000
– To produce more of one good, less of
👉
With training = ₹39520
another must be produced. OC = ₹39520 – ₹39000 = ₹520
2. Concave Shape 🔁 3. Jim going to cricket match 🏏
– Due to increasing marginal opportunity
👉
Earnings = ₹170, Ticket = ₹55
cost. OC = ₹170 + ₹55 = ₹225
🔄 Shifts in PPF
Situation Type of
Shift
Example
🛠️ 7. Types of Production
🎯 Increase in Techniques
➡️
Rightward Improved tech,
resources/technology
❌ Decrease in
Shift skilled labour
👷 Labour-Intensive Technique
Shift ⬅️
Leftward Natural
resources disaster, war 🔹 More human effort, fewer machines
📌 Improvement for Rotation/S Tech for
📌 Used in developing economies
only 1 good kewed
Shift🔄
wheat, not rice
🤖 Capital-Intensive Technique
🔹 More machines, less labour
📌 Used in developed economies
Prepared by Rahul Garg | Class XI – Microeconomics: Introduction
🧾 8. Key Concepts & Terms 🧠 Summary Table 3
Term Meaning Example Concept Description
💼 Firm Unit that produces 🏢 Microeconomics 📊
Study of individual units
Study of overall economy 🌍
goods/services for
profit Macroeconomics
🏠 Household All persons living 👨👩👧👦 Economic Choice due to scarcity ⚖️
together under Problem
one roof
📦 Goods 📚👕 🔄
Opportunity Cost Next best alternative foregone
Physical items
(books, clothes)
📈
💬 Services 🧑⚕️👨🏫
PPF Production possibility curve
Intangible
📉
activities (doctor, MRT Rate of sacrifice of one good for
teacher) another
👩🍳 Production 🍞 from
🌾
Process of
converting inputs
into outputs
🍽️ Consumption
🍕
Using Eating
goods/services to pizza
satisfy wants
🤲 Wants Unlimited desires Wanting
a new
phone
🛠️ Resources Anything used to Labour,
produce land,
💰🌾
goods/services capital
🚀 9. Goals of an Economy
🎯
1. Efficient Allocation of Resources
2. Economic Efficiency (No Waste) ♻️
3. Growth of Resources 📈
⚠️ 10. Scarcity: The Root Cause
😥
Scarcity = Shortage of resources compared to wants
✔️
That’s why choices and priorities have to be made
wisely
Prepared by Rahul Garg | Class XI – Microeconomics: Introduction
