The word Economics is derived from the ancient Greek word oikonomia. The father of Economics has defined it as “an inquiry into the nature and causes of the wealth of nations.”Economics has two main branches - Microeconomics and macroeconomics. Where microeconomics deals with how the household and firms in different kinds of markets allocate resources to produce and consume goods, macroeconomics deals with the economy as a whole. It deals with various factors like national output, GDP, income, employment, interest rate, etc. Many economists have given their theories and viewpoints on how to deal with various economic problems. Both the branches are interdependent and complement each other.

Scarcity of resources leading to problem of choice is depicted by which of the following?

Production Possibility Curve (PPC)

The correct answer is option 1: Production Possibility Curve (PPC)

The Production Possibility Curve (PPC) illustrates the trade-offs between two goods or services that an economy can produce, given fixed resources and technology. It shows the maximum possible output combinations of two products that can be produced with available resources and technology, highlighting the concept of opportunity cost and the need to make choices due to scarcity. Scarcity of resources is shown by the fact that to increase production of one good, we have to reduce production of the other.

The other options do not directly depict the problem of choice due to scarcity:

• Indifference curve: Represents combinations of goods that provide the consumer with the same level of satisfaction.
• Fisher’s curve: This curve relates inflation and interest rates.
• Demand curve: Shows the relationship between the price of a good and the quantity demanded, but does not illustrate the problem of resource scarcity.