Question

1 briefly discuss alternative economic system how are resources allocated under each system?

2 what is agricultural economic? what are the main economic sector of agriculture? what is accomplished

3 what is indifference curve? what is inferred by an outward shift of the curve? what do the slope and curve? what do the slope and the curvature of an indifference curve imply?

Answer 1

1)There are four types of economic system in the world namely traditional economic system, mixed economy, command economy & market economies. A traditional economic system is one in which each new generation retains the economic position of its parents and grandparents. Traditional economies rely on the historic success of social customs. tradition decides what an individual does for his living so industry, clothing, and shelter are the same as in previous. Market economies are based on consumers and their buying decisions. Market trends and product popularity generate what businesses produce. The producers choose how to make products based on the most economically sound decision that might mean saving cost and maximizing profit. market decisions rely on supply and demand for pricing. In a command economy, the government controls all economic activity. One example of a command economy is communism. A mixed economy combines Qualities of command economies and market economies into one. Both economies are integral to economic success.

2)Agriculture economics, the study of the allocation, distribution & utilization of the resources used along with the commodities produced by raw materials. Agricultural economics plays a role in the economics of development, for a continuous level of farm surplus, is one of the wellsprings of technological and commercial growth. The main economic sector of agriculture is a primary sector which deals with extraction of raw materials, it includes farming, fishing. Agricultural economics applies principles of economics to issues of agricultural production, natural resources, and rural development.

3)An indifference curve is the locus of various points showing different combinations of two goods providing equal utility to the consumer. An outward shift of the curve means if there is an increase in income our budget line shifts right and our indifference curve shifts outward indicating higher levels of utility. The slope of the indifference curve is the Marginal rate of substitution(MRS). MRS of one good 1 for another good 2 is the number of units of good 2 that the consumer is willing to give up for an additional unit of good 1, so as to maintain the same level of satisfaction. And indifference curve is convex in shape which implies declining MRS, as the quantity of one good increases its MRS goes on diminishing.