Introduction To Microeconomics - Class 11 Commerce Economics - Extra Questions

The assumptions of Production Possibility Curve (PPC) are:

1. The amount of resources are fixed in an economy. Though they can transferred from one use to another.

2.The level of technology used is constant.

3.The resources are fully and efficiently utilised.

4. With the amount of resources in hand, only two goods can be produced.

5.Resources are not equally efficient in the production of all products. So when the resources are transferred from one use to another, the productivity decreases.  

In macroeconomics, full employment of resources refers to a condition where all the resources in the economy is utilized and there is no deficient demand unemployment. However, there is always some level of unemployment that exists in an economy which is known as voluntary unemployment.
Moreover, if there is full employment of resources then it will lead to inflationary pressures within an economy as high demand for goods and services leads to higher demand-pull inflation, which is the major problem faced due to full employment.

1:The problem of distribution can be solved in an economy by the better allocation of resources and a developed market distribution system.
2:When the market system is developed, the goods are produced and pass through a proper channel or supply chain.
3:This ensures that goods effectively reach the end consumer. 

The economic problem arises because the resources in the economy are scarce. The resources present in the economy are limited but the demand for them is unlimited. Due to this, wants of people remain unsatisfied.
As a result, goods are not available and the economic problems related to the allocation of distribution of resources arises. 

• The problem of ‘how to produce’ means which combination of resources is to be used for the production of goods and which technology is to be made use of in production. Once the society has decided what goods and services are to be produced and in what quantities, it must then decide how these goods shall be produced. There are various alternative methods of producing a good and the economy has to choose among them.
  
• For example, cloth can be produced either with automatic looms or with power looms or with handlooms. Fields can be irrigated (and hence wheat can be produced) by building small irrigation works like tube-wells and tanks or by building large canals and dams. Therefore, the economy has to decide whether cloth is to be produced by handlooms or power looms or automatic looms. Similarly, it has to be decided if irrigation has to be done by minor irrigation works or by major works. Obviously, it is a problem of the choice of production techniques.
  
• Different methods or techniques of production would use different quanti­ties of various resources. For instance, the production of cloth with handloom would make use of more labour and less capital. Production by handloom is, therefore, called labour-intensive technique of production. Production of cloth with powerloom or automatic loom would utilise less labour and more capital. Production with powerlooms is, therefore, called capital-intensive technique. Thus, the economy has to choose whether it wants to use for production labour-intensive methods or capital-intensive methods of produc­tion.
  
• Obviously, the choice between different methods would depend on the factor-supply situation and the prices of the factors of production. The criterion, it is obvious, must be the cost of production. It is well known that the resources are scarce. However, some resources are more scarce than others. It is in society’s interest that those methods of production are employed that make the greatest use of relatively plentiful resources or, conversely, economies as much as possible on the relatively scarce resources.

Microeconomics 1. It is that part of economics which deals with the individual units of the economy.  2. It takes into account the demand and supply of individual units.  3. It aims to determine the price of a product using the factors of production. 4. Example: Individual income and Individual output.

Macroeconomics 1. It is that part of economics which deals with the economic issues that take place on a large scale.  2. It takes into account aggregate demand and aggregate supply.   3. It aims to determine income and employment level of the economy.  4. Example: National income, National output.

• The problem ‘what to produce’ can be divided into two related questions. First, which goods are to be produced and which not; and second, in what quantities those goods, which the economy has decided to produce, are to be produced. If productive resources were unlimited we could produce as many number of goods as we liked and, therefore, the question “What goods to be produced and what not” would not have arisen. But because resources are in fact scarce relative to human wants, an economy must choose among different alternative collections of goods and services that it should produce.
  
• If the Society decides to produce particular goods in a larger quantity, it will have to withdraw resources from the production of some other goods. Further, an economy has to decide how much resources should be allocated for the production of consumer goods and how much for capital goods. In other words, an economy has to decide the respective quantities of consumer goods and capital goods to be produced.
  
• The choice between consumer goods and capital goods involves the choice between the present and the future. If the society decides to produce more capital goods, some resources will have to be taken away from the production of consumer goods and. therefore, the production of consumer goods would have to be cut down. But greater amount of capital goods would make possible the production of larger quantities of consumer goods in the future. Thus, we see that some current consumption has to be sacrificed for the sake of more consumption in the future.

For whom to produce:

1· This problems deals with the issue of deciding the category of people who will consume the goods. That is to produce goods for the poor or for the rich.

2:Since the resources are scarce, the economy has to decide for whom it will produce goods.

3:The goods are produced according to the paying capacity of the people. And this capacity depends on the income level of the people. 

The basic problems of an economy are:

1. Scarcity of resources: the resources (i.e. land labour, capital, etc.) are limited in relation to their demand. If the resources would have been unlimited, there would not have been any economic problem.

2.Unlimited human wants: the wants of a man are never ending and can never be fully satisfied. When one want gets satisfied, another want arises.

3.Alternate uses: resources are not only scarce but they also have alternate uses. This means that they can be put to various uses. Due to this, a choice has to be made between various uses.  

The central problem of 'How to Produce' deals with which production technique to employ in the production of the decided goods and services. That is, whether to employ labour intensive technique or to employ capital intensive technique of production. Here, the economy needs to decide which particular production technique should be adopted in order to utilize its available resources in the best possible efficient and optimal manner. India, for instance, is a labour abundant country. Thus, it will be more beneficial for India to opt for labour intensive techniques, as this will not only minimise the cost of production (due to cheap availability of labour) but will also help in reducing unemployment.

Micro variables are the individual units in the economy such as individual firm, single producer or an individual consumer. These are used in the study of microeconomics.

	Microeconomics	Macroeconomics
Definition	The branch of economics that studies the behavior of an individual consumer, firm, producer is known as microeconomics.	The branch of economics that studies the aggregate units of the economy like national income, employment, is known as macroeconomics.
Principles	Individual economic variables	Aggregate economic variables
Scope	Deals with various issues like demand, supply, product pricing, factor pricing, production, consumption, economic welfare, etc.	Deals with various issues like, national income, general price level, distribution, employment, money etc.
Importance	Helpful in determining the prices of a product along with the prices of factors of production (land, labor, capital, entrepreneur etc.) in the economy.	Maintains stability in the general price level and resolves the major problems of the economy like inflation, deflation, deflation, unemployment and poverty as a whole.
Limitations	It is based on unrealistic assumptions, i.e. In microeconomics it is assumed that there is a full employment in the society which is not at all possible	It has been analyzed it is not always true that what is true for aggregate may not be true for individual units too. Concepts of macroeconomics cannot be generalized.

1.Partial equilibrium is a condition of equilibrium in the theory of economics which takes into consideration only a part of the market to attain the equilibrium. It studies the effect of one variable upon the other without considering the effect of other factors.

For example, law of demand is studied in relationship with price by keeping all other factors constant.  

2.General equilibrium is the equilibrium that studies an economic phenomenon by taking all the aggregate units in the economy into consideration.

For example, product prices make demand for each commodity equal to its supply and factor prices make the demand for each factor equal to its supply so that all product markets and factor markets are simultaneously in equilibrium.

The micro theory of distribution explains how the rates of rewards for various factors of production ( land, labour, capital and entrepreneur) are determined. It deals with the determination of relative prices of factors of production.

Yes I agree with the statement.

Microeconomics studies the behavior of an individual consumer, firm and  producer in the economy.

On the other hand, macroeconomics studies the aggregate units of the economy like national income, employment,etc. 

Macro Economics is different from Micro economics.

• Micro economics:  It is that part of economics which deals with the individual units of the economy. 
  
• Macroeconomics: It is that part of economics which deals with the economic issues that take place on a large scale. 
  
• Macroeconomics is wider than Microeconomics as it takes into account aggregate demand and aggregate supply and aims to determine income and employment level of the economy. Whereas microeconomics takes into account the demand and supply of individual units. 
  

The term ‘Macro’ is derived fro the Greek word 'Makro' meaning large. So Macro variables are the ones used in macroeconomics. It is that part of economics which studies the economic problems and issue that are on a large scale. It studies about the performance of the economy as a whole and not of any individual firm or business and express it in terms of aggregates. It focuses on the study of problems like inflation, unemployment, poverty, etc.  

Microeconomics 1. It is that part of economics which deals with the individual units of the economy.  2. It takes into account the demand and supply of individual units.  3. It aims to determine the price of a product using the factors of production. 4. Example: Individual income and Individual output.

Macroeconomics 1. It is that part of economics which deals with the economic issues that take place on a large scale.  2. It takes into account aggregate demand and aggregate supply.   3. It aims to determine income and employment level of the economy.  4. Example: National income, National output.

Micro - economics is based on certain assumptions. But the assumptions are unrealistic. The assumptions are as follows:
(a) Rationality : Micro - economics assumes that all individuals behave in a rational manner for instance a consumer makes best use of his income to derive maximum possible satisfaction. Also a producer makes best use of resource to maximise profit. But in reality decisions may be influenced by emotions, values preference and so on.
(b) Full employment and Laissez-Faire : The study of micro economics is based on assumption of full employment and Laissez-Faire. Full employment is an exception and Laissez-Faire (complete freedom) is no longer practised.
(c) Ceteris Paribas : Micro - economics is based on assumption other things being equal. E.g. law of demand states that other things remaining the same, the quantity demanded of a product is inversely related to its price.
(d) Perfect mobility of Resources : Micro economics assumes that there is perfect mobility of factors of production. Producers are free to enter any industry which provides maximum returns on investment, labor is free to enter in any profession which provides maximum return on his service.

The theoretical and the practical importance of Micro economics is as explained below:
(1) Working of a Free Market Economy: In such an economy, economic decisions such as what to produce, how much to produce, how to produce, etc. are taken up by private individuals. These decisions are based on consumer's preference or demand for product.
(2) Optimum Allocation of Resources: It explains how the resources are allocated and utilised optimally to produce various goods and services in a capitalist economy. Optimum allocation of resources results in maximum production without waste of scarce resource.
(3) Price Determination: It explains how prices of goods and factors of production are determined in the product and factor market through market mechanism.
(4) Useful to Government: It is useful in formulating and evaluating economic policies including pricing and distribution policies that promote economic welfare. It is useful in determining tax policy, public expenditure policy etc.
(5) Public Finance: It is also useful in analysing the impact of direct tax and indirect tax on economic welfare. allocation of resources, etc.
(6) International Trade: Micro economics also explains gains from international trade, effects of tariffs, factors affecting exchange rate, etc.
(7) Basis of Welfare Economics: It explains how optimum use of resources can be made to increase the welfare of the society by eliminating inefficiency in production.
(8) Model Building: Micro economics builds simple model which helps us in understanding complex economic situations. Decisions taken by the individual agents are the basis for the working of the economy.

Micro economics analyses how the scare resources are allocated efficiently to the production of goods and services. It helps in resolving the central economic problems of the economy at an individual level. Allocation of resource involves what to produce, how to produce and how much to produce. Efficiency in the allocation of resources is attained when the resources are so allocated that maximises the satisfaction of the people.

(a) Micro is derived from Greek word "Mikros" meaning small.
(b) Micro economics is a branch of economics, which is concerned with the study of economic behaviour of individual economic units like individual household, firms, industries, etc.
(c) Micro economics is the study of particular firms, particular household, individual prices, wages, incomes, individual industries, particular commodities.

Microeconomics: It is that part of economics which deals with the individual units of the economy. It takes into account the demand and supply of individual units. It uses slicing method because it divides the economy in slices, parts or individual units for the purpose of in-depth study.

Shifts in the production possibilities curve are caused by things that change the output of an economy, including advances in technology, changes in resources, more education or training (that's what we call human capital) and changes in the labor force..

Problem of choice refers to the allocation of various scarce resources which have alternative uses that are utilized for the production of various commodities and services in the economy for the satisfaction of unlimited human wants.

Scarcity of resources refers to the situation where the resources are limited in quantity and have alternative uses in production of various commodities which have high demand in the economy that results in excess demand as supply is limited.

Microeconomics studies economic relationships or economic problems or economic issues at the level of an individual- an individual firm, an individual household or an individual consumer.

The central problems of an economy deals in the production of goods and services in an economy where it is decide that 

• What to produce? (Consumer goods or capital goods)
  
• How to produce? (Using labour or capital)
  
• For whom to produce (Rich people or poor people)
  

A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy. So the belief that income should be distributed evenly is an example on normative nature. 
Ex:Farmers should always be granted subsidies to ensure good returns on their investment.

Positive economics describes the matter of the presence of a theory with proven facts and figures that needs to be taken into account before developing the theory.
Whereas Normative economic is based on beliefs that are supported by valued judgement which is better for the nation's economic future as well as leads to social welfare. 

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are constant and fully utilized in the production process. 

The basic assumptions of production possibility curve are:

Factors of production (labour and capital) are always jointly used: Labour is combined with capital (say plant, machinery etc). In India, there is severe shortage of capital. In the absence of capital, labour cannot be used. Hence, there is huge unemployment of labour although scarcity of resources is a universal fact.

The slope of production possibility curve is marginal rate of transformation or marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other as the resources and technology are fixed in an economy. 

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. Therefore, all the points on the production possibility curve indicates the point where the resources are fully utilized i.e potential output and even if the resources are not fully utilized then it indicates the real output which is produced. 

Yes, the actual level of output in the Indian economy is far less than its potential level. This is because.
(a) resources are not fully utilised. Mass unemployment in India points to this fact, and
(b) resources are not efficiently utilised in India. Low level of productivity is a well  known feature of the Indian economy.

A shift from stream engines to diesel and electric engines indicates efficiency in the production of output as railways will be able to carry more passengers and goods with the improvement in the technology. So the production possibility curve will shift to the right owing to improvement in technology. 

Guns (units) Bread(units)  marginal opportunity cost  0  30  0  1  28  2  2  24 4  3  18 6  4  10 8  5  0  10

All the points on production possibility curve indicates that the resources are fully and efficiently utilized whereas unemployment is the situation of under utilization and non efficient utilization of resources. So all the points which indicates under utilization of resources falls inside the production possibility curves so the massive unemployment does not shifts the production possibility curve, it falls inside the curve. 

In an economy, if more and more resources are explored and technology improves constantly then also the central problems of an economy will exist because human wants are unlimited due to which the resources become scarce irrespective of their continuous exploring. 

Production possibility frontier is drawn on the assumption that the given resources and technology are fully as well as efficiently utilized. so if resources are inefficiently utilized in an economy, it implies that the economy is not maximizing its output with the given resources. It is a situation when the concerned economy is not operating on the production possibility curve, but is somewhere within the production possibility frontier. So that, it it possible to increase the level of output of Goof-X, or Good-Y or both X and Y. 

No, Owing to underutilisation of resources as well as inefficient utilisation of resources we are operating somewhere within the PPC.

If the working days under MGNREGA will be increased from 100 to 150 days, it will increase the employment in the economy which will increase the overall output of the economy due to efficient utilization of resources because of adequate employment in the economy. 

The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. Since resources are use specific, therefore every time when one more unit of a commodity is produced more units of the other commodity is sacrificed that results in increasing marginal opportunity cost. 

The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. Therefore, if marginal opportunity cost remains constant as in the above case i.e. 13 then production possibility curve will be a straight line owing to constant slope.

Good-A (Units)	Good-B (Units)	Marginal Opportunity Cost
0	65	$$-$$
1	52	$$\dfrac{13}{1} = 13$$
2	39	$$\dfrac{13}{1} = 13$$
3	26	$$\dfrac{13}{1} = 13$$
4	13	$$\dfrac{13}{1} = 13$$
5	0	$$\dfrac{13}{1} = 13$$

The above schedule shows that the marginal opportunity cost of producing more of Goods-A in place of Good-B is constant $${=13}.$$ Accordingly , production possibility frontier should be a downward sloping straight line.

To achieve the parity between the actual level of output and the potential level of output in the Indian economy, following points should be considered and taken care of:

The central problem of 'choice of technique' relates to the question for "How to produce?" which is faced by the economy where the economy consider either labour intensive techniques or capital intensive techniques for the production of goods and services in the economy depending upon the available resources in the economy.

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. So if there is increase in the availability of the resources in the economy then automatically the overall output in the economy increases which shifts the PPC to the right. 

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. It sets the relationship between the scarce resources and the production of two commodities where it is decided the ratio of resource utilization for the production of the two goods.

Central problems of an economy are. What to produce, How to produce, and For whom to produce.
'What to produce' relates to the problem of choice of goods and services to be produced.
'How to produce' relates to the choice of technique of production. It involves a choice between labor-intensive technique and capital - intensive technique.
'For whom to produce' relates to the distribution of goods and services across different sections of society. It focuses on the issue of Economic Equality.

The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from the production of one commodity to the other.
Since resources are use specific, therefore every time when one more unit of a commodity is produced more units of the other commodity are sacrificed that results in increasing marginal opportunity cost which leads to the concave shape of the production possibility curve.  

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. Usually an economy produces inside the production possibility curve owing to inefficient and under-utilization of resources. 

The central problems of production deals with production of necessary commodities using scarce means of resources. It includes problems that deal with the production of goods in an economy where it is decide that 

The central problems of production deals with production of necessary commodities using scarce means of resources. It includes problems that deal with the production of goods in an economy where it is decide that 

• What to produce? Consumer goods or capital goods?
  
• How to produce? Using labour or capital?
  
• For whom to produce? Rich people or poor people?
  

The central problem of "what to produce?" which is faced by the economy where the economy decides the goods that needs to be produce in the economy wether consumer or capital goods to satisfy human wants keeping in mind the available resources and state of technology in the economy. 

The central problem of "for whom to produce?" which is faced by the economy where the economy decides the consumer i.e rich people or poor people of the goods and services that are produced in an economy with the given resources and state of technology that prevails in the economy. 

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. Therefore, any point inside the production possibility curve indicates under utilization of resources because the economy can produce more with the given resources and any point beyond the production possibility curve  cannot be achieved because the economy does not have the required resources to produce such amount of ouput. 

Watches (Millions)	Shoes (Thousands)	Marginal Opportunity Cost
$$0$$	$$90,000$$	-
$$1$$	$$80,000$$	$$\dfrac {10,000}{1} = 10,000$$
$$2$$	$$68,000$$	$$\dfrac {12,000}{1} = 12,000$$
$$3$$	$$52,000$$	$$\dfrac {16,000}{1} = 16,000$$
$$4$$	$$34,000$$	$$\dfrac {18,000}{1} = 18,000$$
$$5$$	$$10,000$$	$$\dfrac {24,000}{1} = 24,000$$

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized.

The central problem of "what to produce?" which is faced by the economy where the economy decides the goods that needs to be produce in the economy to satisfy human wants.

The central problems of the economy arises because the resources in the economy are scarce and human wants are unlimited. Therefore, there is need for an efficient relationship between both the factors. 

The central problem of "How to produce?" which is faced by the economy where the economy consider either labour intensive techniques or capital intensive techniques for the production of goods and services in the economy depending upon the available resources in the economy.

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. Therefore, all the points on that blue curve indicates fuller and efficient utilization of resources. 

• Capitalist economies has private ownership where utilization of resources takes place for private gains, therefore here price mechanism takes place very smoothly without any government intervention to resolve the centrally based economic problems.
  
•  Socialist economies has public ownership where utilization of resources takes place for social welfare, here the centrally based planning authority solves all the central economic problems keeping in mind the national priorities.
  
• In a mixed economy both private as well as public enterprises utilize the resources for the production of goods and services for personal as well as social gains. Therefore, the private sector generates price mechanism in the economy to solve to the centrally based economic problems whereas the public sector depends upon an efficient economic plan to be executed to eradicate these problems. 
  

As the government has started promoting foreign capital, it will lead to an increases in the availability of resources, thereby shifting the Production Possibility Curve(PPC) parallelly to the right. Hence, an economic value is reflected in terms of increased output and resources.

Following are the basis problems of an economy:

The central problems of an economy are : 

1. What to produce problem refers to selection of the category of people who will ultimately consume the goods, i.e. whether to produce goods for more poor and less rich or more rich and less poor.
2. Since resources are scarce in every economy, no society can satisfy all the wants of its people. Thus, a problem of choice arises.
3. It means, this problem is concerned with distribution of income among the factors of production (land, labour, capital and enterprise), who contribute in the production process.

Following are the importance of micro economics:

(1) Working of a Free Market Economy: In such an economy, economic decisions such as what to produce, how much to produce, how to produce, etc. are taken up by private individuals. These decisions are based on consumer's preference or demand for product.
(2) Optimum Allocation of Resources: It explains how the resources are allocated and utilised optimally to produce various goods and services in a capitalist economy. Optimum allocation of resources results in maximum production without waste of scarce resource.
(3) Price Determination: It explains how prices of goods and factors of production are determined in the product and factor market through market mechanism.
(4) Useful to Government: It is useful in formulating and evaluating economic policies including pricing and distribution policies that promote economic welfare. It is useful in determining tax policy, public expenditure policy etc.
(5) Public Finance: It is also useful in analysing the impact of direct tax and indirect tax on economic welfare. allocation of resources, etc.
(6) International Trade: Micro economics also explains gains from international trade, effects of tariffs, factors affecting exchange rate, etc.

An example of a positive economic statement: "Government-provided healthcare increases public expenditures."

Microeconomics studies the behaviour of individual economic units of an economy, like households, firms, individual consumers and producers, etc. The scope of microeconomics is as follow:

1. Product Pricing: The main principle in microeconomics is product pricing or price mechanism. Prices of individual commodities are determined by market forces of demand and supply.
2. Factor Pricing: Microeconomics deals with the pricing of factors of production like land, labour, capital, and entrepreneur. All factors contribute to the production process. These factors get rewards in the form of rent, wages, interest, and profit respectively.
3. Welfare Theory: Microeconomics also deals with the optimum allocation of resources and maximization of social welfare.

Microeconomics is dependent upon macroeconomics because the analysis of individual movement is done according to the movement of all the individuals in an economy. For example, consumption of goods and services by a single person depends on the consumption of those particular goods and services by the society where that single person resides. Macroeconomics depends on microeconomics. The analysis of a whole economy is only achieved through the analysis of the individual parts of the economy. This is because the individual parts of the economy make up the entire economy. Hence, both macroeconomics and macroeconomics depend on each other.

The Marginal Rate of Transformation (MRT) is constant. The Production Possibility Curve, so formed, would be a downward-sloping straight line to the origin. 

Central problems of an economy are the problems faced by and common to all kinds of economic systems (capitalism, socialism and mixed economy). Central problems of an economy are. What to produce, How to produce, and For whom to produce.

1. 'What to produce' relates to the problem of choice of goods and services to be produced.
2. 'How to produce' relates to the choice of technique of production. It involves a choice between labor-intensive technique and capital - intensive technique.
   
3. 'For whom to produce' relates to the distribution of goods and services across different sections of society. It focuses on the issue of Economic Equality.
   

Problem of Choice refers to the allocation of various scarce resources which have alternative uses that are utilized for the production of various commodities and services in the economy for the satisfaction of unlimited human wants. Hence, problem of choice is the basis of economic problem.

WHAT TO PRODUCE?

How to produce refers to the technique of production.  The problem of choice emerges because there are more than one way of producing goods and services.

The three basic problems of economic system are :

Production possibility curve shows the different combinations of the production of two commodities that can be achieved in an economy given the resources and technology which are to be fully utilized.

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilised. 

'Scarcity'  is revealed by the fact that any movement along the PPC (like moving from point D to F), So if the production of good-x is increased from R to S then the production of good-y decreases from C to E which indicates that the resources are limited or scarce because if production of one good increases then the production of the other decreases. 

Normative economic is based on beliefs that are supported by valued judgement that is do's and don't's which is better for the nation's economic future as well as leads to social welfare.

Production possibility curve (or PPC) is drawn on the assumption that the given resources are fully as well as efficiently utilised. If the widespread floods in Kashmir have led to the destruction of human lives, it implies the loss of manpower. This will shift the PPC leftward from $$ab$$ to $$a_1b_1$$, as shown in Figure.

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. So if there is an improvement in the technology for the production of wheat then the output of only wheat will increase which will rotate the production possibility curve of wheat to the right. from ab to ab1

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized.

Guns (Units)	Bread (Units)	Marginal Opportunity Cost
0	30	−−
1	28	221=2
2	24	441=4
3	18	661=6
4	10	881=8
5	0	10

Production possibility frontier is a curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. It sets the relationship between the scarce resources and the production of two commodities where it is decided the ratio of resource utilization for the production of the two goods.

'Make in India" campaign encourages the production of all types of goods within the domestic territory of India and aims at import of capital goods from the foreign countries. Therefore, it results in the increase of overall production the economy which leads to an outward or a rightward shift in the production possibility curve. 

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized. So if there is an improvement in the technology for the production of apple then the output of only apple will increase which will rotate the production possibility curve of apple outward from ab to a1b.

Positive Economics : Positive economics state what is and what has been occurring in an economy as the basis for any statements about the future. Positive economics is concerned with the development and testing of positive statements about the world that are objective and verifiable. Positive economics can be referred to as “what is, what was, and what probably will be” economics. Positive economics is based on sound economic theory, probability, and statistical methods. Positive economics studies and determines the probable outcomes from an increase or decrease in taxes. Positive economics does not prescribe that taxes should be increased or decreased. That decision is for the people of our democratic society to evaluate and decide through their duly elected political representatives. Positive economics provides only the probable outcomes of alternative decisions. It is assumed that an educated society will make the most rational choices for themselves, and exercise those choices in the market place.