Important Questions with Answers for CBSE Class 11 Economics Part B Unit 1 – Introduction to Micro Economics, which is outlined by expert Economics teachers from the latest version of CBSE (NCERT) books.
Question 1
What are the three central problems of Economy?
Answer:
The three central problems of Economy are:
- What to Produce
- How to Produce
- For whom to Produce
Question 2
Give two examples of Micro and Macro Economy.
Answer:
Two examples of Micro economy are individual supply and individual demand and two examples of Macro economy are aggregate supply and aggregate demand.
Question 3
Define Scarcity.
Answer:
Scarcity refers to the deficit of resources as compared to the demand.
Question 4
A growth of resources in an economy is shown in PP by.
(a) Leftward Shift
(b) Unchanged PPC
(c) Rightward Shift
(d) None of the above
Answer:
(c) Rightward Shift
Question 5
What is another name for opportunity cost in economics?
(a) Economic problem
(b) Marginal Cost
(c) Total Cost
(d) Economic Cost
Answer:
(a) Economic problem
Question 6
The central economy in market research is solved by.
(a) Demand for goods
(b) Supply of goods
(c) Planning authority
(d) Market mechanism
Answer:
(d) Market mechanism
Question 7
Is the subject of the Jute industry studied in a macroeconomy?
(a) True
(b) False
(c) Maybe
(d) Can’t say
Answer:
(b) False
Question 8
What is the Production Possibility Frontier?
Answer:
Production Possibility Frontier is the curve that depicts the maximum output possibility for two combination goods that are produced when the resources are fixed at a given period of time.
Question 9
Define marginal rate of transformation.
Answer:
Marginal Rate of Production MRT is the ratio of a particular product sacrificed to manufacture another product. MRT= â–²y / â–²x
Question 10
From the scheduled PP evaluate MRT of good X.
|
PRODUCT POSSIBILITY |
A |
B |
C |
D |
E |
|
Production of good X units |
0 |
1 |
2 |
3 |
4 |
|
Production of good Y units |
14 |
13 |
11 |
8 |
4 |
Answer:
|
Production of good X units |
Production of good Y units |
MRT= â–²y /â–²x |
|
0 |
14 |
– |
|
1 |
13 |
1:1 |
|
2 |
11 |
2:1 |
|
3 |
8 |
3:1 |
|
4 |
4 |
4:1 |
Question 11
The primary assumption about resources while drawing a PPC is
(a) Resources are limited
(b) Resources depend on the kind of products produced
(c) Resources can be put to a particular use
(d) Resources are constant and given
Answer:
(d) Resources are constant and given
Question 12
Which of the following is a statement of normative nature in economics
(a) Economics is a study of choices /alternatives
(b)The government should be concerned with how to reduce unemployment
(c) According to the estimate, in spite of severe shortage, more than 10% of houses in Indian cities are vacant
(d) Accommodation of refugees is posing a big problem for Europe
Answer:
(a) Economics is a study of choices /alternatives
Question 13
What are the three central problems of an economy?
Answer: The three central problems of an economy are (a) What to produce? (b) How to produce (c) For whom to produce?
Question 14
What is the opportunity cost?
Answer:
Opportunity Cost is the next best alternative foregone.
Question 15
What do you mean by economising of resources?
Answer:
Economizing means making the best of the available resources.
Question 16
Define Normative Economics.
Answer:
Normative Economics is a theory that understands what an actual economy should be under ideal circumstances as compared to what it actually is. It is mostly based on judgmental analysis and a statement ‘what ought to be’.
Question 17
What does the problem for whom to produce refer to?
Answer:
The problem for whom to produce refers to a particular section of people who will consume the end product. Here, the problem of choices arises because the manufacturers are unable to produce each product in huge quantity to satisfy everybody’s need.
So, the consumers have to make choices between which product is more important to them, so the limited resources can be distributed rationally.
Question 18
What does the opportunity cost mean? Explain with a numerical example.
Answer:
Opportunity Cost is something when an individual has to give up something to achieve or acquire something else. In microeconomy, the opportunity cost is also known as alternative cost and it is also used in calculating cost benefits or analysing a project in terms of best alternative while making a choice.
For example, Dev has three career offers to choose from. Job X has a salary offer of Rs 60000, job Y offer is Rs. 70000 and job Z offer is Rs. 80000. So, in this case, out of three offers, Dev has to choose what is best for him. If Dev opts for job offer Z the next best alternative not chosen is job offer Y and thus the opportunity cost is Rs 70000.
Question 19
What is the difference between the planned economy and market economy?
Answer:
Planned Economy – A planned economy has one person or a group who takes a decision on production, investment, pricing and distribution, etc, and produces products and services that are pre-planned. The planned economy is a centrally planned economy and the decisions are basically taken by the government.
In other words, the planned economy is also known as a command economy because everybody has to follow one person, his command and guidelines. The aim of the planned economy is to increase production by making sure that everything required is manufactured and that everyone’s requirements are fulfilled.
Most assets are controlled and owned by the state.
Market Economy- A market economy is controlled by external authority and may have one individual who might decide what to produce, whom to produce, and how to get the things done. This type of economy keeps changing according to the demand and supply and taste of a consumer. The main issue in the economy is that a company might refuse to manufacture goods if it’s unprofitable for them. Most assets are controlled and owned privately.
A few differences between the planned economy and market economy are as follows.
- The planned economy operates according to the structure planned by the government. Whereas, the market economy operates based on market demand.
- Decisions on production, investment, pricing, and distribution, etc are taken by the government whereas in the market economy it is in the free market.
- A planned economy doesn’t identify consumer needs, supply and shortages. Whereas, in a market economy, demand and supply are based on those factors.
Question 20
Explain the central problem of the choices of products to be produced.
Answer:
The basic economic activities are based on the production, allocation and distribution of goods and services. These are the major problems in the economy and other difficulties revolve around them. Allocation of goods and services relates to a problem of assigning the inadequate supplies in such a way that it fulfills the requirements of maximum number of consumers.
As the demand for the insufficient goods is more than that of the supply it is important to utilize it in the most effective way. In other words, an economy allocates its goods and resources and picks from a different possible package of goods (what to produce), selects from various ways of production (how to produce), and therefore decides who will utilize the product (for whom to produce).
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