AP (Advanced Placement) Macroeconomics Fundamentals of Economics-Demand & Supply Study Material (Page 7 of 14)

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Economic Problems

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Economic Problems

The basic economic activities are:

  • Production
  • Consumption
  • Distribution (Exchange)

In every society, the problem of choice is due to the scarcity of resources.

This scarcity of resources arises due to three central problems:

  • What to produce?
  • How to produce?
  • For whom to produce?

What to Produce? How Much to Produce?

  • An economy has to decide, what commodity is to be produced and in what quantity.
  • A producer must identify the quantity of demand in the market.
  • He has to decide, whether to produce food, clothing, or any luxurious goods; or agricultural goods or industrial goods and services etc.

How to Produce?

  • Refers to cheapest mode of production techniques.
  • Traditional v/s Robotics or Workers v…

… (120 more equations, 13 figures) …

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Economy Characteristics

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Economy Characteristics

  • The word Economy has various definitions with different meanings.
  • We can call-a state or a nation as ‘Economy’ that which production or consumption, import or export takes place. But, in short, we can define-Economy as taking care of various resource or raw materials that which is available in particular region.
Economic Growth
  • When we convert that re…

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