economics

Centrally planned economy/socialist

It is an economic system where all the means of production are under the ownership and control of the government,the government decides important issues like what to produce how to produce ,and for whom to produce

Revenue

The income earned by the firm by selling its output is revenue

• Total revenue

• Average revenue

• Marginal revenue

Total revenue

The total amount recieved by a firm is called total revenue

TR = p × q

Average revenue

Average revenue is the total revenue per unit of output it is calculated dividing the TR by the quantity of output sold

Average revenue = $\frac{TR}{q}$

Market economy/capitalist economy

It is an economic system in which all the means of production are under the ownership of private individuals,in market economy price mechanism decides what to produce,how to produce ,and for whom to produce

Marginal revenue

Marginal revenue is the addition to the total revenue when an additional unit of output is sold it is the reveneua from the sale of additional unit ( marginal unit )

MR = TRn - TRn-1

Mixed economy

It is an economy system in which all the production and ownership are controlled by both govt and private individuals,it is a mixture of socialism and capitalism

• Micro economics and micro economics

• Micro economics

The word micro is derived from the Greek word called the mikros it is called small,micro economics is the study of parts of the economy or individual units of the economy,Micro economics studies about the behaviour of consumer or a produced or the individual parts of the economy

• Macro economics

The word macro is derived from the Greek word called makros,which means large,Macro economics is the study of the economy as whole it is also called aggregate economics or income theory

ppc-

Production possibility curve

PPC is the statistical device used to represent the central economic problems of an economy such as allocation,full utilisation and growth of resources and efficiency in production and distribution,it is also defined as the locus of point of combination of two goods,which an economy can produce with the available resources and given level of technology

Features of PPC

• it is downward sloping curve from left to right

• It is concave to the orgin

• Normative economics.

.Taxes should be increased on the wealthy

.govt increased the minimum wage to hourly which will increase the standard of living of workers

Consumption bundle

Any combination of amount of two goods is called consumption bundle

Budget line equation

$$p1x1+p2x2=m$$

Slope =

$$\frac{p1}{p2}$$

Horizontal intercept =

$$\frac{m}{p1}$$

Vertical intercept=

$\frac{m}{p2}$

Budget line equation when increase in income

$$p1x1+p2x2=m^{\prime}$$

Budget line equation when decrease in income

$$p1x1+p2x2=m1^{\prime}$$

Budget line equation when good 1 increases

$$p1^{\prime}x1+p2x2=m$$

Budget line equation when goods 1 decreases

$$p1^{\prime\prime}x1+p2x2=m$$

Indifference curve

It is defined as the locus point of combination of two goods such as good1 and goods 2 which gives the consumer same level of satisfaction

• Features of indifference curve

.Indifference curve slopes downward from left to right

Indifference curve is convex to the orgin

High indifference curve indicates higher level of satisfaction

Indifference curves does not intersect with eachother

DMRS Diminishing marginal rate of substitution

The marginal rate of substitution between good 1 and good 2 goes on decreasing this is known as diminishing marginal rate of substitution

Indifference map

The collection of indifference curve is known as the indifference map

Consumer equilibrium

The consumer always prefers to have the bundle of higher indifference curve,the preference of the consumer to have the bundle provides him maximum levels of satisfaction is known as consumer equilibrium

What is the formula for Total Variable Cost (TVC)?

TVC = Total Cost (TC) - Total Fixed Cost (TFC)

GDP

Gross domestic product

GNP

Gross national product

NDP

National domestic product

NNP

Net national product