(i) Free goods are goods available in nature and in abundance.
(ii) Man does not need to incur any expenditure to own or use them.
(iii) Example: Air and sunshine

Cost refers to the expenses incurred to produce (or) acquire a given quantum of good. It determines (with revenue) the profit gained (or) the loss incurred by a firm.

(ii) Market means a place or geographical area, where buyers and sellers meet together.
(ii) Buyers and sellers who involve in the transaction of goods and services.

(i) Positive science deals with what it is.
(ii) It is concerned with how and why.

(i) Goods are tangible, (eg) car but services are intangible (eg) goodwill.
(ii) Goods can be stored but services cannot be stored.

(i) Goods are tangible and have physical dimension.
(ii) Goods are transferable and have value in exchange.

(i) Economics means management of households.
(ii) It comes from the Greek word oikonomikos.

Kinds of Goods (and Services)
(a) Free and Economic goods
(i) Free goods are available in nature and in abundance. Man does not need to incur any expenditure to own or use them. For example air, and sunshine. Water was also an example in the past, but at present it has exchange value. So it is not a free good.
(ii) On the other hand, economic goods are not available in plenty. They are scarce in supply. Man has to spend money to own or use them.
(b) Consumer goods and Capital goods:
(iii) Consumer goods directly satisfy human wants, TV, Furniture, Automobile, etc.
(iv) Capital-goods (also called producer's goods) don't directly satisfy the consumer wants. They help to produce consumer goods. For example, machines do not directly satisfy the consumers, but in factories, the manufacturers need them.
(c) Perishable goods and Durable goods:
(v) Perishable goods are short-lived. Their life-span is limited. For example fish, fruits, flower, etc, do not have a long life.
(vi) Durable goods and semi-durable goods have a little longer life-time than the Perishable goods. For example, a table, a chair, etc.

The Problem of Choice:
(i) The problem of choice arises because of limited resources and unlimited wants, may relate to the allocation of resources between the goods for higher income group and the lower income group and the goods for defense and the civilians.
(ii) Since PPC is the locus of the combination of the goods the problem of choice will not arises when we choose any point on PPC.
The notion of scarcity:
(i) Every economy has scarce resources which can produce only limited amount of output even with the help of best technology.
(ii) PPC reflects the constraints imposed by the element of economic scarcity.
The solution of central problems:
(i) The solution of problem of what to produce involves the decision regarding the choice of location on the PPC.
(ii) Any point inside PPC indicates that the economy is using inefficient methods of production and inefficient combination of resources.
Conclusion:
(i) Thus the basic problems of the economy are solved with the help of PPC.

Steps of Deductive method:
(i) Have a clear idea of the problem to be inquired.
(ii) Define the technical terms used. Assumptions should be precise.
(iii) Deduce hypotheses from the assumptions.
(iv) Verify hypotheses through direct observation of events and statistical methods.
Steps of Inductive method:
(i) The collected data must be systematically arranged
(ii) Based on the data, conclusions are drawn
(iii) Generalization of the hypothesis.
(iv) Verification of the hypothesis.

The laws of economics are statements of tendencies. Every cause has a tendency to produce some result. The law of gravitation is a statement of tendency.
(i) A statement of tendency: According to the law of demand, when there is a fall in price of good. The demand for it will expand and vice versa. It means there is a tendency among people to buy more, when there is fall in price.
(ii) Laws operate under certain conditions: Basic assumptions are there for economic law to operate, that is called "ceteris paribus" other things remain the same. When some economic laws do not operate, it means that the conditions have changed.
(iii) Not as exact as physical sciences: Law of gravitation is a simple and exact statement. But in economics we deal with human behaviour which is not firm. So economic laws are not as exact as physical sciences.
(iv) Economics laws are complex and inexact: As it deals with human beings and their behaviour. There are exceptions to many laws of economics. It changes to changes times.
(v) All economic laws are based on certain assumptions: Every economic law is governed by certain assumptions. The law will hold good only when the assumptions are satisfied.
(vi) The laws of economies are hypothetical: Unlike physical sciences, economic laws .cannot be verified, by experiment. This is why we says sometimes that economic laws are hypothetical.

The different types of utility are:
(i) Form utility: An individual consumer obtains utility from a good or service only when it is available in a particular form. Raw materials in their original form may not" possess utility for a consumer. But in their changed forms as they become finished products, they provide utility to him. For example, cotton as a raw material may not possess utility for a consumer; but as it gets a new form as a cloth, it yields the consumer utility.
(ii) Time utility: A sick man derives time utility from blood not at the time of its donation, but only at the operation-time, i.e., when it is used.
(iii) Place utility: A student derives place "utility from a book not at the place of its publication (production centre) but only at the place of his education (consumption centre).
(iv) Service utility: An individual consumer derives service utility from a service made available at the time when he most needs it. For example, clients obtain service utility from their lawyers, patients derive service utility from the doctors and so on.
(v) Possession utility: When a student buys a book or dictionary from a book seller, then only it gives utility.
(vi) Knowledge utility: It is the utility derived by having knowledge of a particular thing. Advertisement serves as a source of information on an object.

Micro Economics: Micro Economics deals with problems in to account small components of the whole economy. It is known as price theory.
This theory uses technique of partial equilibrium.
Importance of Micro Economics:
1. To understand the operation of an economy.
2. To provide tools for economic policies.
3. To examine the condition of economic welfare.
4. Efficient utilization of resources.
5. Useful in international trade.
6. Useful in decision making.
7. Price determination.

Introduction: Goods and services satisfy human wants. Goods also called "Products", "Commodities", "things" etc.
Types of Goods
1. Free and Economic Goods: Free goods are available in nature and in abundance. They do not command a price in the market: (Ex) Air, Sunshine. Economic goods common a price in the market. They are scarce in relation to supply (Ex) T.V, Furniture.
2. Consumer goods and capital goods: Consumer goods directly satisfy human wants (Ex) Table, Chair. Capital goods also called Producers goods do not directly satisfy the consumer wants. They help to produce consumer goods. (Ex) Machinery.
3. Perishable goods and durable goods: Perishable goods are short-lived. Their life span is limited (Ex) Fish, Fruits. Durable and semi-durable goods have a little longer life time than the perishable goods (Ex) TV, Table.

(i) Man promotes primarily welfare and not wealth.
(ii) The science of economics contains the concerns of ordinary people who are directed by the desired to get maximum monetary benefit.
(iii) Economics is a social science. It studies about I people in the society who influence one another.