Important features of a capitalist economy are:
(i) There is private ownership of means of production.
(ii) Production takes place by selling the output in the market.
(iii) There is sale and purchase of labour services at a price, called the wage rate.
(iv) There is free play of the market forces of demand and supply.
(v) Profit motive over-rules production.

Production possibilities refer to the various combinations of the two given goods that can be produced in an economy with the fixed resources, assuming that the resources are fully and efficiently used.

In the given schedule, we observe that MRT is increasing, so production possibility curve will be downward sloping and concave to the origin.

Cleanliness leads to a reduction in the chances of people falling sick. Thus, it can ensure better health. When one is healthy, he will be regular in his work. This will raise the productive efficiency of the people. Ultimately, the country's production potential will get a boost. This rise in the country's potential to produce will shift the Production Possibility Curve to the right.

MOC or MRT is defined as the addition made to the cost in terms of number of units of a good sacrificed to produce one more unit of the other goods.
                                       Schedule

In the given schedule, there are five combinations. Combination A depicts none of X and all of Y and combination E denotes nothing of Y is produced and all resources are utilised to produce Y. In combination B, to produce 1 unit of X, one unit of Y is sacrificed. In this way we observe that to have one more unit of X, 1Y, 2Y's, 3Y's and 4Y's are sacrificed respectively. This shows the increasing rate of sacrifice or MOC.

Production possibility curve is based on the following assumptions:
(a) The economy is producing only two goods.
(b) The resources available with the economy are given and fixed:
(c) Resources are not equally suitable for production of both the goods but can be shifted from production of one good to the other.
(d) All the available resources are fully and efficiently employed and there is no wastage
(e) Technology available with the economy is also given and fixed.

(i) National income is a subject matter of macroeconomics because it studies the determination of the income at an aggregate level.
(ii) Price determination of a commodity is the subject matter of microeconomics because it deals with the behaviour of an individual commodity.
(iii) General price level is studied in macroeconomics as it deals with the price as an aggregate.

The central problems of an economy are as follows:
(a) What to produce is defined as the problem of choice between different goods that can be produced from the given scarce resources. An economy has millions of commodities to pr.oduce. It has to decide whether to produce luxury goods or necessities. It may have to decide between capital goods and consumer goods and so on.
(b) How to produce is defined as the problem of choice between different techniques of production available in the economy. Every economy faces the problem as to how resources should be combined for the production of a given commodity. Depending upon the abundance of a particular resource, an economy may choose between labour-intensive and capital- intensive techniques.
(c) For whom to produce is defined as the problem of choice between different ways of functional and physical distribution of income and output in the economy. What goods should be consumed and by whom depends upon how national product/income is distributed among people/factors of production. All central problems arise due to scarcity of available resources, having alternative uses.

(a) Points A, B, C, D and E indicate that there is full utilisation of resources.
(b) Point 'G' inside the curve indicates under-utilization of resources.
(c) Point H outside the curve indicates that the economy cannot produce at any such point above the PPC, the reason being that the fixed resources do not allow to do so.
(d) The economy must increase its resources to attain point H.

An economic problem mainly arises on account of the scarcity of the resources available to satisfy the unlimited human wants. To a large extent, if the resources were not limited, the economic problem would not have arisen, because every want could be satisfied, i.e., everyone could have everything. But this indeed is not true as the reality is that relative scarcity will continue to prevail and the other related problem -of 'choice' would always exist. One is always confronted with the problem of what to choose and what to give up, i.e., sacrifice. Thus, scarcity, being a relative term, will always exist and so would an economic problem.