Q.Discuss how the Family Farm, Weaver and Teacher can use their resources to fulfill their needs in a simple economy.
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Start your 14-day free trial to unlock the full solution →Each unit uses its own resources to produce something and exchanges it: the family farm produces food, the weaver produces cloth, and the teacher provides education — meeting one another's needs through exchange.
In a simple economy (introductory macroeconomics, Karnataka 2nd PUC), different producing units use their available resources (factors of production) to satisfy their needs:
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Family Farm — its resources are land, family labour, seeds, bullocks and simple tools. Using these, the farm produces food grains, vegetables and other agricultural products. It keeps part of the produce for the family's own consumption and sells the surplus in the market. With the income (and by exchange) it buys cloth from the weaver and pays the teacher for educating its children.
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Weaver — his resources are yarn/thread, a loom and his skill and labour. He uses them to weave cloth. He consumes some cloth himself and exchanges the rest for food grown by the farm and for other services. Thus he satisfies his need for food by producing and exchanging cloth.
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Teacher — his resources are his knowledge, skill and time. He provides the service of teaching to the children of the farmer, the weaver and others, and in return earns fees (in money or in kind such as food or cloth). With this he meets his needs for food and clothing.
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