1. Microeconomics- It deals with the economic behavior of individual units and constitutes a very small segment of the whole economy.
2. Macroeconomics- It deals with the economic behavior of the whole economy.
Fundamental economic Questions:
1. what goods and services to produce and how much?
-investors are willing to produce goods and services which give them good profit.
2. how to produce the goods and services?
-Goods and services must be produced in the most efficient manner to maximize profit.
-use of efficient technology.
3. For who are the goods and services?
-For those who have money and are willing to purchase them.
- An economic system is a set of economic institutions that dominates a given economy. An institution is a set of rules of conduct, established ways of thinking, or ways of doing things. Examples are taxation, profit motive, economic planning, production or banking.
- The principal objective of an economic system is to solve the basic economic problems. They have varied concepts, strategies, and ways of improving the living conditions of their peoples. However, all economic systems have one common goal: high standard of living for all their citizens.
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