Scarcity

in Pakistan electricity is shifted from industrial to house hold

usage due to shortage in Ramadan, this shows that resources required to produce
electricity are scarce
Macro economics budget represented by finance minister on 6 th of June, is mainly
related to macroeconomics
Microeconomics
budget.

a salaried person will get 7%raise in his salary, announced In

Factors of production
land (oil, extracted by Pakistan), labour (Mr. Khan, my
teacher), capital (infrastructure, machinery and building of LAS),
entrepreneur (my father, ceo of style textile )
Three questions

what to produce (weather USA should produce spaceship or

should produce medicine)
How to produce ( hush puppies is facing a question whether to
produce shoes using labour intensive or capital intensive
production method)
For whom to produce (style textile is facing a question whether
to sell in Pakistan or to export it products)

Production possibility curve

shows what combination USA can have of health
and defense
Trade of

USA has allocated more resources on health but at the same

time USA has to compromise defense budget

Opportunity cost

I am doing this assignment so I have to sacrifice my soccer

match

Traditional economy

Malawi is aggri based economy

Command economy

USSR, before fall.

Market economy

USA, not pure but near to market economy

Ceteris Paribas

If the United States drilled for oil off of its own shores, ceteris paribus, the price of
gasoline in the United States would drop significantly.

Invisible hand metaphor take a look at American farming. In the 19th century, people from all over
the world rushed to the American Midwest, lured by the promise of free land. So
there were plenty of individuals who endeavored to employ their capital so that its
produce may be of the greatest value.

Hundred years later, the vast majority of those farmers' descendants live in cities
and have nothing to do with farming; food prices have been continuously falling
relative to incomes. Three percent of the U.S. population engaged in farming are
capable of feeding the entire country and export food while they are at it, but their
standard of living is generally below that of the city dwellers. So by working hard,
innovating, and maximizing their output, American farmers have actually
promoted affordability of food for city dwellers and lower living standards for
themselves compared to city dwellers, an end that was no part of their intention...

Circular flow of products and resources

Resource market

London commodity market (Brent oil)

Product market

liberty market for consumer goods

Factor market
Ppf curve

Externalities

pollution in Beijing (negative)

Job opportunities for residents of Beijing (positive)

Public goods

US navy, US air force.

Private goods

play station, Xbox

Law of demand

increased university fee in US universities has caused less

number of application this year

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increased prices of iphone provided Samsung an opportunity to

penetrate the smart phone market in 2006

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reduced steel prices allowed Honda motors to produce more

cars and ofer its new Honda city at lower price

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having cup of tea gives me satisfaction

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every next cup of tea is going to give me less satisfaction

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higher incomes gives higher purchasing power

Decrese in price of x box caused decrese in demand of play
station
Decrease in oil prices allowed to produce more electricity, at
lower cost to IPPs in Pakistan
Reduced interest rates to 7 % encouraging more consumption in
Pakistan
Heat wave in Karachi (seasonal change) caused an increase in
demand of electricity

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Versace reduces prices of its products before x-max to boost its

sales because Versace knows that responsive change in QD is
going to be more than change I prices.

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I have never seen any pharmacy announcing 50% of because

they know medicines are bought only by the patients so any
decree in prices is not going to attract people to buy more
medicines

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