Economic assignment

By Jalil Ahmed
Roll No 15
Goods and services

Goods and services are the output of an economic system. Goods are tangible
items sold to customers, while services are tasks performed for the benefit of the
recipients. Examples of goods are automobiles, appliances, and clothing. Examples
of services are legal advice, house cleaning, and consulting services
1. Free goods
A free good is a good that is not scarce, and therefore is available without limit. A
free good is available in as great a quantity as desired with zero opportunity cost to
society. A good that is made available at zero price is not necessarily a free good
2. Productive goods
3. All goods and services are produced using productive resources (also known as
factors of production). These resources are divided into four broad categories:
natural (land), human (labor), capital and entrepreneurship.
Concept of opportunity cost

When economists refer to the “opportunity cost” of a resource, they mean the
value of the next-highest-valued alternative use of that resource. If, for example,
you spend time and money going to a movie, you cannot spend that time at
home reading a book, and you can’t spend the money on something else.
Individual decision
Individual decision refers to the decision making process where an individual
selects the course of action to be followed in the business from various
alternatives whereas collective decision refers to the group decision which
occurs at mutual agreement from the group.
Social decision
Strategy or rule used in a group to select a single alternative from among
various alternatives proposed and discussed during the group’s deliberations
Labour market and trade

Definition: A labour market is the place where workers and employees interact
with each other. In the labour market, employers compete to hire the best, and
the workers compete for the best satisfying job. Description: A labour market in
an economy functions with demand and supply of labour
Labour trade
Definition: Labour unions or trade unions are organizations formed by workers
from related fields that work for the common interest of its members. They help
workers in issues like fairness of pay, good working environment, hours of work
and benefits.
The division and specialization of Labour
Specialization of labor, or division of labor, occurs when companies divide their
production or service process into several set tasks. Employees repeat a single
portion of the production process rather than performing multiple tasks themselves.
Examples of specialisation and division of labour
Some workers will design the cars.
Some will work on testing cars.
Some will work on marketing.
Some workers will work on different sections of the assembly line. Their job may be
highly specific such as putting on tyres e.t.c.
Microeconomics VS macroeconomics

Microeconomics
Microeconomics is the study of decisions made by people and businesses
regarding the allocation of resources and prices of goods and services. The
government decides the regulation for taxes. Microeconomics focuses on the
supply that determines the price level of the economy.
The key role of microeconomics is to examine how a company could maximise its
production and capacity, so that it could lower the prices and compete in its industry.
A lot of microeconomics information can be obtained from the financial statements
The key factors of microeconomics are as follows:
Demand, supply, and equilibrium
Production theory
Costs of production
Labour economics
Examples: Individual demand, and price of a product.
Macroeconomics

Macroeconomics is a branch of economics that depicts a substantial picture. It

scrutinises itself with the economy at a massive scale, and several issues of an
economy are considered. The issues confronted by an economy and the headway
that it makes are measured and apprehended as a part and parcel of
macroeconomics.
Macroeconomics studies the association between various countries regarding how
the policies of one nation have an upshot on the other. It circumscribes within its
scope, analysing the success and failure of the government strategies.In
macroeconomics, we normally survey the association of the nation’s total
manufacture and the degree of employment with certain features like cost prices,
wage rates, rates of interest, profits, etc., by concentrating on a single imaginary
good and what happens to it.

The important concepts covered under macroeconomics are as follows:

The important concepts covered under macroeconomics are as follows:

Capitalist nation
Investment expenditure
Revenue
Examples: Aggregate demand, and national income.
Monetary policy and fiscal policy

Monetary policy
Monetary policy addresses interest rates and the supply of money in circulation,
and it is generally managed by a central bank. Fiscal policy addresses taxation
and government spending, and it is generally determined by government
legislation
Fiscal policy
Fiscal policy refers to the use of government spending and tax policies to
influence economic conditions, especially macroeconomic conditions. These
include aggregate demand for goods and services, employment, inflation, and
economic growth
Difference

Summary
In this reading, we have sought to explain the practices of both monetary and
fiscal policy. Both can have a significant impact on economic activity, and it is for
this reason that financial analysts need to be aware of the tools of both
monetary and fiscal policy, the goals of the monetary and fiscal authorities, and
most important the monetary and fiscal policy transmission mechanisms
Governments can influence the performance of their economies by using
combinations of monetary and fiscal policy. Monetary policy refers to central
bank activities that are directed toward influencing the quantity of money and
credit in an economy. By contrast, fiscal policy refers to the government’s
decisions about taxation and spending. The two sets of policies affect the
economy via different mechanisms
Money fulfills three important functions: It acts as a medium of exchange,
provides individuals with a way of storing wealth, and provides society with a
convenient unit of account. Via the process of fractional reserve banking, the
banking system can create money
The amount of wealth that the citizens of an economy choose to hold in the
form of money—as opposed to, for example, bonds or equities—is known as the
demand for money. There are three basic motives for holding money:
transactions-related, precautionary, and speculative.
The addition of 1 unit of additional reserves to a fractional reserve banking
system can support an expansion of the money supply by an amount equal to
the money multiplier, defined as 1/reserve requirement (stated as a decimal
Central banks take on multiple roles in modern economies. They are usually the
monopoly supplier of their currency, the lender of last resort to the banking
sector, the government’s bank and bank of the banks, and they often supervise
banks. Although they may express their objectives in different ways, the
overarching objective of most central banks is price stability.
Economic model and math

Economic model
An economic model is a simplified description of reality, designed to yield
hypotheses about economic behavior that can be tested. An important feature of an
economic model is that it is necessarily subjective in design because there are no
objective measures of economic outcomes.
What are the 3 economic models?
The most commonly used economic models can be given as visual economic
models, mathematical economic models, and economic simulations
Examples
1 :-Circular flow diagram
The circular flow diagram is one of the basic concepts of economics. This diagram
explains the general movement of money on a day-to-day basis through the relationship
that exists between the main economic agents, such as companies, families and the
public sector.
2 goods and services market
The goods and services market is where households purchase consumable
items and businesses sell their wares. The market includes stores, the
Internet, and any other place where consumer goods and services are
exchanged

3:- labour market

Description: A labour market in an economy functions with demand and
supply of labour. In this market, labour demand is the firm’s demand for
labour and supply is the worker’s supply of labour. The supply and demand of
labour in the market is influenced by changes in the bargaining power.
Purpose of functions

An economic model is a simplified description of reality, designed to

yield hypotheses about economic behavior that can be tested. An
important feature of an economic model is that it is necessarily
subjective in design because there are no objective measures of
economic outcomes
What are the two functions of the economic model?
In general terms, economic models have two functions: first as a
simplification of and abstraction from observed data, and second as
a means of selection of data based on a paradigm of econometric
study.
Solving and simple equation
Order of Operations
Remember, when you solve an equation it’s important to do each operation in the
following order:

Simplify inside parentheses and brackets.

Simplify the exponent.
Multiply and divide from left to right.
Add and subtract from left to rightIn this course you will not use exponents, but you will
need to remember the order of the other steps. So, in solving the following equation,
you multtiple

Y=9+3×10
Y=9+30
Y=39
Understanding variables

To a mathematician or an economist, a variable is the name given to a quantity that

can assume a range of values. In other words, the value of a variable can change or
vary. In an equation it’s represented by a letter or a symbol. Because economic
models often consider cause and effect, variables are important. You will often be
asked to consider a range of options that result from different variables. Below is a
very simple example:
Y=9+3x
Tions, we might start with 0. What does y equal if X=0?
Y=9+3(x)
Y=9+3(0)
Y=9+0
Y=9
Working with Variables
Remember that when you’re trying to solve an equation with one or more
variables, you need to isolate the variable. Let’s walk through a simple example
using the same equation from above. What if we want to solve the equation in a
case
Creating and interpreting graphs

It’s important to know the terminology of graphs in order to understand and

manipulate them. Let’s begin with a visual representation of the terms (shown in
Figure 1), and then we can discuss each one in greater detail
Throughout this course we will refer to the horizontal line at the base of the graph as
the x-axis. We will refer to the vertical line on the left hand side of the graph as the y-
axis. This is the standard convention for graphs. In economics, we commonly use
graphs with price (p) represented on the y-axis, and quantity (q) represented on the
x-axis.
,An intercept is where a line on a graph crosses (“intercepts”) the x-axis or the y-axis.
Mathematically, the x-intercept is the value of x when y = 0. Similarly, the y-intercept
is the value of y when x = 0. You can see the x-intercepts and y-intercepts on the
graph above.

The point where two lines on a graph cross is called an intersection point.
The other important term to know is slope. The slope tells us how steep a line
on a graph is as we move from one point on the line to another point on the line.
Technically, slope is the change in the vertical axis divided by the change in the
horizontal axis. The formula for calculating the slope is often referred to as the
“rise over the run”—again, the change in the distance on the y-axis (rise) divided
by the change in the x-axis (run)
Now that you know the “parts” of a graph, let’s turn to the equation for a line
In this equation for a line, the b term is 9 and the m term is 3. The table below
shows the values of x and y for this equation. To construct the table, just plug in
a series of different values for x, and then calculate the resulting values for y.
Interpreting slope

IA higher positive slope means a steeper upward tilt to the line, while a smaller
positive slope means a flatter upward tilt to the line. A negative slope that is
larger in absolute value (that is, more negative) means a steeper downward tilt
to the line. A slope of zero is a horizontal flat line.
Slopes comes in different forms
Positive slope
Negative slope
Zero slope
Calculating slope
Non linear relationship
Positive slope

A positive slope means that two variables are positively related—that is, when x
increases, so does y, and when x decreases, y decreases also. Graphically, a positive
slope means that as a line on the line graph moves from left to right, the line rises.
Negative slope
A negative slope means that two variables are negatively related; that is, when x
increases, y decreases, and when x decreases, y increases. Graphically, a negative
slope means that as the line on the line graph moves from left to right, the line falls
Zero slope
Zero slope is when the slope of an equation or line is equal to zero. This produces a
horizontal line. A vertical line is not a zero slope line because the slope is undefined,
not zero. The equation for a zero slope line is y = b, which means that y is equal to a
constant.
Calculating slope
How To: Given two points from a linear function, calculate and interpret the
slope.
Determine the units for output and input values.
Calculate the change of output values and change of input values.
Interpret the slope as the change in output values per unit of the input value
Non linear relationship
The slope of a nonlinear curve changes as the value of one of the variables in
the relationship shown by the curve changes. A nonlinear curve may show a
positive or a negative relationship. The slope of a curve showing a nonlinear
relationship may be estimated by computing the slope between two points on
the curve.
Types of graph lines

They are:
Simple Line Graph: Only one line is plotted on the graph.
Multiple Line Graph: More than one line is plotted on the same set of axes. A
multiple line graph can effectively compare similar items over the same period of
time.
Compound Line Graph: If information can be subdivided into two or more types of
data.
The following pages describe the different parts of a line graph.
The Title. The title offers a short explanation of what is in your graph. …
The Legend. The legend tells what each line represents. …
The Source. The source explains where you found the information that is in your
graph. …
Y-Axis. …
The Data. …
X-Axis.
Bar graph
The following pages describe the different parts of a bar graph.
The Title. The title offers a short explanation of what is in your graph. …
The Source. The source explains where you found the information that is in your
graph. …
X-Axis. Bar graphs have an x-axis and a y-axis. …
Y-Axis. …
The Data. …
The Legend.
Types of Bar Charts
Basic Bar Charts. A basic bar chart represents bars in order to compare nominal
or ordinal data across categories. …
Stacked Bar Charts. …
Segmented Bar Charts. …
Clustered Charts. …
Dual Axis Clustered Bar Charts. …
Dual Axis and Stacked Charts
Pie graph
People also ask
What type of graph is a pie chart?
A pie chart, sometimes called a circle chart, is a way of summarizing a set of
nominal data or displaying the different values of a given variable (e.g.
percentage distribution). This type of chart is a circle divided into a series of
segments.A pie chart, also known as a circle graph, histogram, pie diagram, or
scatter diagram, is a type of graph that uses a circular graph to view data. The
graph’s pieces are equal to the percentage of the total in each group. In other
words, the size of each slice of the pie is proportional to the size of the group as
a whole. The entire “pie” represents 100% of a total, while the “slices” represent
parts of the whole.
At a glance, pie charts will help you understand the scale of your portions. They
are commonly used in business presentations and education to display
proportions among a broad range of categories, such as expenditures,
population groups, and survey responses.
What are the 7 types of pie chart?
There are mainly 7 types of pie charts using which one can represent the data.
They are 3D pie chart and perspective pie cake, Doughnut chart, Exploded pie
chart, Polar area diagram, Ring chart, Spie chart, Square chart.
What is the pie concept?

Briefly stated, Coleman asserts that career success is based on the 3 key
elements of Performance, Image and Exposure (a.k.a. PIE): Performance: this is
about the day-to-day work you’re tasked with and the quality of the results you
deliver. Image: this is what other people think of you. Your personal brand.
Comparison of graph lines

They are:
Simple Line Graph: Only one line is plotted on the graph.
Multiple Line Graph: More than one line is plotted on the same set of axes. A
multiple line graph can effectively compare similar items over the same period
of time.
Compound Line Graph: If information can be subdivided into two or more types
of data.
What are the different types of comparison graphs?
If you want to compare values, use a pie chart — for relative comparison — or
bar charts — for precise comparison. If you want to compare volumes, use an
area chart or a bubble chart. If you want to show trends and patterns in your
data, use a line chart, bar chart, or scatter plot.
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