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It handles a broader view of a business environment. It is relevant to both domestic and

multi*national companies which comes into existence in the mar'et due to globalisation.

Economic Problems:

"here are three main problems are -What

goods and services are produced and in whatquantities, -How should these goods and services be produced and for -whom. %ll

countries must deal with these three basic questions. "his problems arise due to scarcity

of resources.

Types of Economies:

"here are three important types of economies prevalent:

(ar'et economy:

in a market economy, there is minimal government interference in the market (ie. no price controls,

regulations, etc). The only government interference that is necessary is the enforcement of propertyrights, laws that penalize fraud, and a court system. Property is owned privately, not by the

government in any form, all transactions are voluntary, and the means of production are owned by

private individuals or voluntary associations.), 0 are few of the nations which has mar'et

economy.

$ommand economy:

"he economy in which the government ta'es all the ma1or economic decisions and holds

the rights on all the resources of the nation is called as $ommand economy. Economy in

which government planning dominates the direction of economic activity, and mar'et

forces are not allowed to do so to any considerable degree. 2orth 0orea, $uba are

examples of this 'ind of economy

(ixed economy:

A mixture of planned and free-market policies, limited government intervention and regulation, but

relatively free market forces. (ost of the modern countries have mixed economy where

decisions are made in mar'etplace with governments passing laws and framing policies

that regulate overall economy of the nation.

Economic Model: sed to forecast or predict results of various changes in variables.

3. Identify the problem

4. evelop a model based on simplified assumptions.

5. $ollect data and test the model.

Societys Technoloical Possibilities:

Each and every economy has only limited resources and hence should optimie them for

efficient use. 6y as'ing questions li'e what how and for whom they are deciding how to

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distribute a limited quantity into unlimited demand. !or this we need to address the below

needs:

Inputs* commodities or services that are used to produce goods and services.

"hese can also be broadly classified in the following:7and: It includes the natural form of resources li'e land is required for setting up factories

7abour :it refers to the human time spent on production

$apital: "hese are the goods produced to produce other goods li'e machines hammers

etc.

&utputs: "hey are the various useful goods or services that result from the production

process and will be either further utilied or consumed by the consumer.

"he Production*Possibility !rontier: PP! shows various combinations of amounts of two

commodities that could be produced using same fixed total amount of each of the factors

of production. !or an economy to increase the quantity of one good produced, production

of the other good must be sacrificed.

!roup "earnins:

%s a team with diverse nature we came to a consensus that the ultimate goal of economics

is to bridge the gap between scarcity and the rising demand for resources. 8ith the highlevel of unemployment, global competition in the mar'et we need to effectively utilie

our resources. 8hile investing we need to identify the dynamics of macro and micro

economics .Economically and socially successful economies have significant

contributions from both the government and the private sectors.