An economy in which a central government either directly or indirectly sets output targets, incomes, and prices. • Laissez-faire Economy Literally from the French:
“allow [them] to do.” An economy in which individual people and firms pursue their own self-interests without any central direction or regulation. • Mixed Economies:
The differences between command economies and laissez-faire economies in their pure forms are enormous. In fact, these pure forms do not exist in the world; all real systems are in some sense “mixed.”
THE LOGIC OF ECONOMICS Scientific Approach: – Goal: to make general statements about how the economy works – Theoretical and empirical research are necessary for forecasting and economic analysis – Economic theory: a set of ideas about the economy, organized in a logical framework – Economic model: a simplified description of some aspect of the economy – Usefulness of economic theory or models depends on reasonableness of assumptions, possibility of being applied to real problems, empirically testable implications, theoretical results consistent with realworld data
l devaluation of Canadian dollar and Australia dollar;
l decrease in prices of inputs in these places;
l increase in film and TV production by Hollywood studios;
“In Other Words If We Decrease The Price input Then The curve Shift toward right but if price input increase then curve shift toward left” just Like I shown In previous graphs……..
Second Factor: Technology:-
A change in technology may result in a more effective and efficient way of production of a product or provision of a service in two ways:
In other words we can say that technology is the source to shift the graph to word left or right
(A)Increase in technology.
(B)Decrease in technology.
(A) Increase In technology
à Production cost lowered
à Greater profit margin
à Willing to produce more
à Price depressed
(B) Decrease In Technology
à Production cost increased
à Profit margin squeezed
à Produced less
à Price increased
Example: Distribution of National Newspapers
“In the past, only geographically small countries could sustain national newspapers. Even New York Times, a prestigious newspaper, its circulation is mostly restricted in the East coast of USA. The reason: newspaper printing is done at a central plant and then the newspaper copies will be distributed to the market. The cost of transportation and time taken must be taken into account when you want to distribute the newspaper nationwide. The coming of new technology: Newspaper content can be sent to a number of places for printing and then distribution can be done at the same time.”
Macroeconomics looks at the total output of a nation and the way the nation allocates its limited resources of land, labor and capital in an attempt to maximize production levels and promote trade and growth for future generations.
Microeconomics looks into similar issues, but on the level of the individual people and firms within the economy. It tends to be more scientific in its approach, and studies the parts that make up the whole economy. Analyzing certain aspects of human behavior, microeconomics shows us how individuals and firms respond to changes in price and why they demand what they do at particular price levels.
Economics
The study of choice and decision-making in a world with limited resources.
Export
To send and/or sell goods and services outside of one's country.
Goods
Anything that anyone wants. All options or alternatives are goods.
Import
To bring in and/or buy goods and services from another country.
Income
The amount of money one earns. This can be through one's job or through investments, etc..
Industry
The manufacturing (making) and selling of a particular type of good or service - for example the auto industry.
Inflation
Increase in the overall level of prices over an extended period of time.
Macroeconomics
The study of the sum total of economic activity, dealing with the issues of growth, inflation0 and unemployment and with national economic policies relating to these issues.
Manufacture
To make or process (a raw material) into a finished product, especially by means of a large-scale industrial operation.
Market
A network in which buyers and sellers interact to exchange goods and services for money.
Money
The accepted common medium of exchange for goods and services in the marketplace that functions as the unit of account, a means of deferred payment and a store of value.
Microeconomics
The study of the individual parts of the economy, the household and the firm, how prices are determined and how prices determine the production, distribution and use of goods and services.
Price
The amount of money, or other goods, that you have to give up to buy a good or service.
Product
Something produced or made by human or mechanical effort or by a natural process. In business, products are things or items to be bought and/or sold.
Profit
The excess of income over all costs, including the interest cost of the wealth invested. This means making money after one has paid all the expenses in a business.
Resource
An available supply of something that can be used. There are natural resources, human resources, etc..
Scarcity
Insufficient supply or amount of something needed, a shortage or goods or services that are needed.
Services
The performance of any duties or work for another; helpful or professional activity
Trade
The business of buying and selling goods and services.
Wages
The payment for work or services to workers - the money people are paid at their jobs.
Consumer
A person who buys economic goods and services
Distribution
The supplying of goods and services to retailers and others so that people's needs can be met.
