Q.

1 What do you known about 'Economics' & how microeconomics & macroeconomics
analysis helps to form policies of any country?

A. Economics is a social science concerned with the production, distribution and consumption
of goods and services. It studies how individuals, businesses, governments and nations make
choices on allocating resources to satisfy their wants and needs, and tries to determine how these
groups should organize and coordinate efforts to achieve maximum output.

Economic analysis often progresses through deductive processes, much like mathematical logic,
where the implications of specific human activities are considered in a "means-ends" framework.
Economics can generally be broken down into macroeconomics, which concentrates on the
behavior of the aggregate economy, and microeconomics, which focuses on individual
consumers.

'Macroeconomics'

Macroeconomics is a branch of the economics that studies how the aggregate economy behaves.
In macroeconomics, a variety of economy-wide phenomena is thoroughly examined such as
inflation, price levels, rate of growth, national income, gross domestic product (GDP) and
changes in unemployment.

'Microeconomics'

Microeconomics is the social science that studies the implications of individual human action,
specifically about how those decisions affect the utilization and distribution of scarce resources.
Microeconomics shows how and why different goods have different values, how individuals
make more efficient or more productive decisions, and how individuals best coordinate and
cooperate with one another. Generally speaking, microeconomics is considered a more complete,
advanced and settled science than macroeconomics.

Q.2 What is Economics & Why Economics is known as the science of

choice and scarcity?

A. ECONOMICS CALLED SEIENCE OF CHOICE AND SCARCITY

From our definition of economics, we can easily see why economists view the world through the
lens of scarcity.

Scarce economics resources mean limited goods and services.

Scarcity restricts options and demands choices. Because we “can’t have it all,” we must decide
what we will have and what we must forgo.

At the core of economics is the idea that “there is no free lunch.” You may be treated to lunch,
making it “free” from your perspective, but someone bears a cost-ultimately, society. Scarce
inputs of land, equipment, farm labor, the labor of cooks and waiters, and managerial talent are
required . Because society could have used these resources to produce something else, it
sacrifices those other goods and services in making the lunch available. Economists call such
sacrifices opportunity costs: To obtain more of one thing, society forgoes the opportunity of
getting the next best thing. That sacrifice is the opportunity cost of the choice.

Q.3 Differentiate between positive and normative Economics?

Positive
 Positive economics is the study of economics
based on objective analysis. Most economists
today focus on positive economic analysis,
which uses what is and what has been
occurring in an economy as the basis for any
statement about the future.
 Positive economics focuses on causes and
effects, behavioral relationships, and facts
involved in the evolution and development of
economic theories. Positive economics is often
called "what is" economics
 An example of a positive economic statement
is: "increasing the interest rate will encourage
people to save." This is considered a positive
economic statement because it does not
contain value judgments, and its accuracy can
be tested.  For example, the statement, "government should
 For example, the statement, "government-
provided healthcare increases public
expenditures" is a positive economic
statement, as it can be proved or disproved by
examining healthcare spending data, where
the government provides healthcare.
Normative
 Normative economics is a perspective
on economics that reflects normative, or
ideologically prescriptive, judgments toward
economic development, investment projects,
statements and scenarios.
Normative economics heavily concerns itself with
value judgments and statements of "what ought to
be" rather than facts based on cause-and-effect
statements. Normative economics expresses
ideological judgments about what may result in
economic activity if public policy changes are
made.
 For example, stating that we should strive for
economic growth of x% or inflation of y% could be
seen as normative.
provide basic healthcare to all citizens" is a
normative economic statement. There is no way to
prove whether government "should" provide
healthcare; this statement is based on opinions
about the role of government in individuals' lives,
the importance of healthcare, and who should pay
for it.
Q.4 Explain production possibility curve with help of increasing opportunity cost?
.
A production–possibility frontier (PPF) or production possibility curve (PPC) is the possible tradeoff of
producing combinations of goods with constant technology and resources per unit time. One good can
only be produced by diverting resources from other goods, and so by producing less of them.

What is 'Opportunity Cost'

Opportunity cost represents the benefits an individual, investor or business misses out on when
choosing one alternative over another. While financial reports do not show opportunity cost,
business owners can use it to make educated decisions when they have multiple options before
them.

Opportunity cost is an economics term that refers to the value of what you have to give up in
order to choose something else. In a nutshell, it’s a value of the road not taken.