4

In macroeconomics, we try to get an understanding of u ce •More food

the economy as a whole by focusing our attention on od •Kind of goods to be produced
o Pr
measures, such as, total output, employment etc. tt •Quantity of goods to be produced

ha
W
In microeconomics, we study the •More luxury items
behavior of individual economic •More agricultural products
agents in the market for different Central Problems Ho
of an Economy wt
goods and services are determined o •With the help of labour
Pro
throug h t h e i n t e ra c t i o n o f d uce •With the help of machinery

For
individuals in these markets. •Which technology to be adopted

W
ho
m
to
Pr
od
uc
e •How to distribute equal
output to all
•How everyone gets the
• Positive economics focuses on benefit of production
‘What is’ phenomenon.
• ''Government provided health
Introduction
care increase public expenditures
A n e nti r e ne tw o r k o f producers,
Econ
i s a n ex a m p l e o f p o s i t i v e omy
economics. distributors and consumers of goods and
services of goods and services in a local,
regional or national community.
O

pp
or
tu
nit
• ‘‘What ought to be’’phenomenon. y Cost
• ‘‘Government should provide basic Value of the next best
health care’’ is an example of alterative foregone.
normative economics.

The collection of all possible combinations Trace the Mind Map

of the goods and services that can be




First Level Second Level Third Level

produced from a given amount of
resources are called production possibility
frontier.
OSWAAL CBSE Sample Question Papers, ECONOMICS, Class-XI
 Set is the set of bundles of
The benefit gained by consuming one Utility is a measure of preferences over some set of goods and services. goods an agent can afford
It represents satisfaction experienced by the consumer from a good. S et
additional unit of product or service. et
Mind Maps

dg

Bu
Shows all the combinations
 MRSxy= MUx = Px
The law of diminishing marginal MUy Py of two commodities that a
utility is a law of economics stating  Indifference curve should consumer can afford at given

B
that as a person increases consumption be convex to origin. ud market prices and within the
get
of a product, there is decline in Line particular income level.
the marginal utility that person
derives from consuming each unit. A graph that shows a
ing combination of two goods
an that give a consumer
Me
e equal satisfaction and
 Marginal utility of last rupee spent urv utility thereby making

um
C

ri
on each commodity is same. e

nc
the consumer indifferent.

lib
re

ui
 Marginal utility falls as consumption

q
iffe
increases. E
d
 Convex to origin
er's
In
Conditions of Consum  Downward sloping
Good
Consumer's 2
Quantities of a commodity or a service Mea
n Demand Equilibrium
that people are willing and able to buy and Demand
Ind

in
Analysis

g
iff

at various prices.
O
ere

mand Good 1
De
nc

Law of demand states % Change in quality demanded

e

ed=
M

that the demand and % Change in price The graph representation of

ap

price of a commodity are two or more indifference curves

inversely proportionate. tor Affecting  Number of Close Substitutes, showing the several
Fec
(Demand curve)  Switching Cost, combination of different
 Degree of necessity, quantities of commodities,

Price
 Habits of Consumers. which consumer consumes.
O Good
Demand
2
IC3
If the prices of other goods, the Consumer's IC2
income and her tastes and preferences change, ed=, Does exits in real life. IC1
O
demand curve shifts leftwards or rightwards. Good 1

Price Price ed=0,e.g., Demand ed<1 , e.g.,

for rare medicine. gasoline,
c

ed<1 , e.g., Trace the Mind Map

salt , food,
sti




a First Level Second Level Third Level

Demand Demand
ed=1 .There is no perfect example El furniture, motor etc.
O O vehicles, etc.
of Close example is Clothing.
5
 6

Total output of a commodity

produced. The output per unit
of variable input.

The firms do not have enough time,

ct
du
to change the factors of production,

Total P
o
Pr
i.e., some remain constant.

r od
e

uc
t
ag
er
Av

Different Products

S ho
r
t-r
M

un
a rg The change in output per
in a
l Pro
duct unit of change in the input
when all other inputs remain
Production constant.
Function
Production
Function

n
ru
g-
Lon
Return to a
Factor
Return to a factor
relate to the short –
The supply of inputs, labour and period production
capital is assumed to be elastic. function when one
factor is varied keeping
the other factors fixed
in order to have
more output.
Trace the Mind Map





First Level Second Level Third Level

OSWAAL CBSE Sample Question Papers, ECONOMICS, Class-XI
 Mind Maps

 Large number of buyers & sellers, E=Dx=Sx

Y
 Homogeneity of the product, D
 Free entry & exit of firms, Excess Supply S
 Perfect knowledge of the market. } E

Price
}
Excess Demand D
 Maximum price fixed by the
S
Government for a commodity.
O X
 In India, price ceiling is generally Demand / Supply
imposed on necessary items like
wheat, rice, kerosene oil etc.

 When there is increase in

hanges demand, price increases.
em and C
D  When there is decrease in
nly
nO demand, price decreases.
he
Perfect Competition W
with simple applications When Only Supply
Cha
ng es
.

 Minimum price fixed by the Government

above the equilibrium price.
Examples: Agricultural Price Support
Programmes, Minimum Wage
Legislation, etc.

Trace the Mind Map .





First Level Second Level Third Level

7