Question

A. Answer four questions: 1. What is the difference between microeconomics and macroeconomics? What are the three focus of microeconomics and why? 2. What does a production possibilities frontier (Curve) illustrate? Discuss and show graphically. 3. The market system and command system differ in two important ways. Compare and contrast all economic systems with examples. 4. Explain Circular flow diagram in an open economy. Show graphically.

Answer 1

® What is the difference between microeconomics a marco@conomics ? What are the three focus of micro lomo. - Micro economics is concerned with Particular markets, and segments our and why? study of of the economy. It looks at issues such as consumber be haviour, individual labo markets, and the theory of firms. 1. Macro economics is the study of the whole economy It loola at eaggregate' variables, such as aggregate demand, national output and inflation. The two key elements of this economic Science are the interaction between supply and demand and sharity of goodi. one of the major goal of microeconomics is to analyze the market and determine the price for goods and services that best allocates limited resources among the different alternative uses-

e showing choices Kidney cancer other Health Care Services D ☺ what does production possibilities frontier illustrate? Discuss and show (curve) graphically, . A PPC as shows all the combinations of two goo which can be provided if all resources are being use officiently. User: This ppc shows all the combination of owing choices Kidney cancer treatments and other health Care Services available in the economy. The NHS can provide kc kidney care treatments and no other sonice, te other Service and no kidney treatmentor any of the combinatione in between such on A . where HCA health care service and - KCA kidney treatments are provided Kidhar cancer Treatment USC 2: Opportunity costs can be illustrated If the NHS reallocated its resources (moking produce along the ppc from A to B) it can moro kidney cancer care but only at the expense of fewer other health care services, 1 The opportunity cost of producing . more ke is the sacrifice of the other services. This can be labelled on the KCA _ other Health Care Services La B diagram. Opportunily. cost of ket kidney treatments rather than kco is the loss of HCO - HC 1 other services. XCO. KC KC is the KC KC . Kidney Cance Treatment

Capital Goods : A to B) 't focom Is it reallocaten its resouro (moving around the ppf from At it can produce more consumer good only at the expense of feweee caps .google. The opportunity cost of Producing an extra xx-xo e consumer goode is Yo-Yo . umer good, but pecure Capital M - - - Yah + - - i capital goods - Xo Xi Xm consumer Goods oll resources . Productive efficiency * The Ppf is drawn on the assumption that - are fully and efficiently employed. Therefore production - Any point on the ppf shows efficient - Any point inside ho ppf shone inefficient production - Any point outside the ppf is currently denobtainable Scanned with CamScanner

º important the market system and command system diffel in two import ways. compare and contrast all economic systeme with examy A Market economice and command economiei occupy Polar extremes in the organization of economic a on the factor of production and the mechanism not organized by demand of gooemples of math no organization of economic activity. The primary difference lie in the division of labore and the mechanism that determine Prices. The activity in a market economy is unplanned, it is not organized by any central authority but is determined by the supply and demand of goodle and sernice. The us, England, and Japan are all examples of market economies. - Alternatively, a command economy is organized by a Centralized government which own most, if not all, businesses and whose officials direct all the factor of Production. China, North Korea, and the former Soviet. Union are all example of command economies. In reality all economies blend some combination of market and . Command economies. Scanned with. CamScanner

diagram in Circuleu flow an open Coulain economy. S 4. economy. show graphically is a neoclassical economic cony. In its . The circular flow of income is a neoclassicale model depicting how money flower through the economy. I Simplest version, the economy is modeled an consisting only of households and firme Money four to workers in the form of wager and money flower back to firme in exchang for Products. - Pag Govermentan Remittances. laxes I for purchase -o factor impuls nomcn.no Taxes - hovermente factor payments a Sauer Konu en als het inte resting vil Financial Market, was niet omloods .c om; Consumption expenditure. - iss & Looming Exports foreign Nations - Export CS Scanned with CamScanner National income : C+ I +6+ (x-4)