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1.
Opportunity Cost :- Unlike most costs discussed in economics, an opportunity cost is not
always a number. The opportunity cost of any action is simply the next best alternative to that
action - or put more simply, "What you would have done if you didn't make the choice that
you did".
Example:-I have a number of alternatives of how to spend my Friday night: I can go to the movies, I
can stay home and watch the baseball game on TV, or go out for coffee with friends. If I choose to go
to the movies, my opportunity cost of that action is what I would have chose if I had not gone to the
movies - either watching the baseball game or going out for coffee with friends. Note that an
opportunity cost only considers the next best alternative to an action, not the entire set of
alternatives.
3. Macro Economics :-macro economics deals with aggregate economic quantity , such
that as the level and growth rate of national output , interest rates , unemployment , and
inflation . but the boundary between macroeconomics and microeconomics gas become
less and less distinct in recent years. The reason is that macroeconomics also involves
the analysis of markets.
Example:- the aggregate market for goods and service, labor , and corporate bonds. To
understand how these aggregate markets operate ,we must first understand the behavior of the
firms , consumers, workers, investors who constitute them .
4. Positive Statement
Positive statements are objective statements that can be tested, amended or
rejected by referring to the available evidence. Positive economics deals
with objective explanation and the testing and rejection of theories. For example:
A fall in incomes will lead to a rise in demand for own-label supermarket foods
If the government raises the tax on beer, this will lead to a fall in profits of the
brewers.
The rising price of crude oil on world markets will lead to an increase in cycling to
work
A reduction in income tax will improve the incentives of the unemployed to find
work.
A rise in average temperatures will increase the demand for sun screen products.
5. Normative Statement
Normative statements are subjective statements rather than objective statements
i.e. they carry value judgments. For example:
The government should increase the minimum wage to 6 per hour to reduce
poverty.
The retirement age should be raised to 70 to combat the effects of our ageing
population.
9.
Free Economy.:- A market economy is where economic decisions are made by the free
market. That means production of goods and services are regulated by the laws
of supply and demand. Producers sell their goods and services at the highest possible price
that consumers are willing and able to pay. Workers also bid their services at the highest
possible wages that their skills allow.