Detailed notes
Microeconomics studies individual decision-makers and markets; macroeconomics studies economy-wide aggregates. Scarcity forces choices about what, how and for whom to produce. A production possibility frontier shows feasible combinations and opportunity cost.
Worked interpretation
An economy can produce 0 or 10 units of X when it produces no Y, and 20 units of Y when it produces no X. A straight-line PPF from (X=10,Y=0) to (X=0,Y=20) has constant opportunity cost: gaining 2 units of Y costs 1 unit of X. Points outside require more resources or better technology.
CBSE-style practice
- A point inside a PPF suggests underused resources; a point beyond is infeasible with current resources and technology. State an assumption.
- Draw a labelled graph or table where it clarifies your reasoning.
- State one limitation or assumption.
Quick revision
Define the term precisely, show formula substitutions when relevant, and distinguish a change in the variable from a change in its determinants.