Economic Problems

Whenever a choice is made by someone, it involves opportunity cost, which is the next best alternative forgone in the process of choice making.

Something isn't free if it has an opportunity cost attached to it.

"There is no such thing as a free lunch"

Free good include water, air, and sunlight

3 questions of Choice Making :-

1. What to produce
2. How to produce
3. For whom to produce

To answer these questions countries come up with various solutions : Planned, Mixed and Free economies

Difference between microeconomics and macroeconomics

• Microeconomics deals with smaller, discrete economic agents such as consumers and producers.
• Looks at individual markets.
• Households
• Firms, Cost of production, trade unions
• Macroeconomics deals with factors that affect the economy as a whole, such as economic growth and the way that well-being is impacted by economic growth.
• Inflation, Deflation
• Employment, GDP Taxes, Demand and Supply Side policies