VERY SHORT ANSWER TYPE QUESTIONS
1. What is economics?
Ans: Economics studies how people make choices to fulfill their unlimited wants with limited resources.
2. Write the definition of economics in the words of Adam Smith.
Ans: Adam Smith described economics as the study of how individuals and societies allocate their limited resources to satisfy their unlimited wants.
3. What is the definition of economics as given by Marshall?
Ans: Marshall defined economics as the study of mankind in the ordinary business of life, examining how people get what they want or need.
4. Define economics in the words of Lionel Robbins.
Ans: Lionel Robbins defined economics as the science that studies human behavior as a relationship between ends and scarce means that have alternative uses.
5. Define microeconomics
Ans:. Microeconomics focuses on individual economic units like households, firms, or markets and their behavior concerning allocation of resources.
6. Point out the importance of microeconomics.
Ans: It is important because it helps understand how individuals and businesses make decisions in resource allocation, pricing, and market behaviors.
7. What is macroeconomics?
Ans: Macroeconomics examines the economy as a whole, including inflation, unemployment, economic growth, and national income.
8. Point out the importance of macroeconomics.
Ans: It helps governments and policymakers understand and manage the entire economy, addressing issues like unemployment, inflation, and economic growth.
9. Give any two differences between microeconomics and macroeconomics.
Ans:
| Microeconomics | Macroeconomics |
| Microeconomics focuses on individual economic units (like households or firms). | Macroeconomics studies the economy as a whole. |
| Microeconomics deals with specific markets and small-scale economic issues. | Macroeconomics examines broader economic trends. |
10. What is positive economics?
Ans: It’s about studying economic facts and data objectively to describe how the economy operates without including personal opinions or values.
11. Define normative economics.
Ans: This type of economics involves subjective opinions and value judgments about what should happen or what’s desirable in the economy
12. Distinguish between positive and normative economics.
Ans:
| Positive Economics | Normative Economics |
| Positive economics deals with facts and what can be proven by data. | Normative economics deals with opinions and value-based judgments. |
| Positive economics is objective and factual. | Normative economics is subjective and value-driven. |
13. What is the main reason behind the origin of an economic problem?
Ans: The main reason is scarcity, where unlimited human wants collide with limited resources.
14. Distinguish between normal and inferior goods.
Ans:
| Normal Goods | Inferior Goods |
| Normal goods are demanded more as income increases. | Inferior goods are demanded less with rising income. |
| Normal goods have a positive income effect. | Inferior goods have a negative income effect. |
15. What is meant by substitute goods?
Ans: These are products that can replace each other, so when the price of one increases, the demand for the other rises.
16. Define public goods.
Ans: These are goods or services that are available to all and where one person’s use doesn’t diminish availability for others.
17. Distinguish between free and economic goods.
Ans:
| Free Goods | Economic Goods |
| Free goods are naturally available and don’t have an opportunity cost. | Economic goods are scarce and have an opportunity cost. |
| Free goods are abundant. | Economic goods are limited in supply. |
18. What do you mean by factors of production?
Ans: These are resources used in making goods and services.
19. Make a list of factors of production.
Ans: Land, labor, capital, and entrepreneurship.
20. Point out the features of land.
Ans: It’s a natural resource with different qualities and locations, limited in supply, and doesn’t involve human creation.
21. What are the features of labour?
Ans: Features of Labor: Involves human effort and skills, varies in quality and quantity, and is mobile.
22. What are the features of capital?
Ans: Man-made goods used to produce other goods and services, can be physical or financial, and increases productivity.
23. Point out any four features of organization.
Ans: Features of Organization: Combines resources efficiently, makes decisions, manages risks, and drives the coordination of other factors of production in business.
SHORT ANSWER TYPE QUESTIONS
1. Explain the main ideas of Adam Smith’s definition of economics.
Ans: Adam Smith, often considered the father of modern economics, viewed economics as the study of how individuals’ pursuit of their self-interest in a market system leads, through the “invisible hand,” to the overall wealth and well-being of a nation. He emphasized the importance of free markets, specialization, and the division of labor in promoting economic growth and societal prosperity.
2. Explain the features of Marshallian definition of economics.
Ans: Features of Marshallian Definition of Economics:
Focus on Human Welfare: Alfred Marshall’s definition of economics focused on human welfare and well-being. He highlighted that economic activities should be analyzed in terms of their impact on human welfare.
Study of Human Behavior: Marshallian economics studied human behavior concerning the allocation of scarce resources to fulfill unlimited human wants. He emphasized the role of supply and demand in determining prices.
3. What are the characteristics of Robbins’ definition of economics? Explain
Ans: Characteristics of Robbins’ Definition of Economics:
Scarcity and Choice: Robbins defined economics as the science that studies human behavior regarding scarce resources that have alternative uses. He highlighted the fundamental problem of scarcity and the necessity of making choices among competing options.
Emphasis on Opportunity Cost: Robbins emphasized opportunity cost—the value of the next best alternative forgone while making economic choices.
4. Distinguish between positive and normative economics.
Ans:
| Positive Economics | Normative Economics |
| This branch of economics deals with objective analysis based on facts and data, without involving personal opinions or value judgments. | In contrast, normative economics involves subjective opinions and value judgments about what should happen or what’s desirable in the economy. |
| It focuses on describing economic phenomena as they are. | It deals with how things ought to be. |
5. Write short note on positive economics.
Ans: This area of study involves objective analysis based on empirical evidence and data. It aims to describe and explain economic phenomena without personal biases or value judgments.
6. Write short note on normative economics.
Ans: It involves subjective assessments and value judgments about what should or ought to happen in the economy, often rooted in individual beliefs, opinions, or ethical considerations.
7. Distinguish between microeconomics and macroeconomics.
Ans: Microeconomics focuses on individual markets, households, and firms, examining their behaviors and decision-making processes in resource allocation.
Macroeconomics studies the entire economy, analyzing aggregates like national income, unemployment, inflation, and overall economic growth.
8. Write short note on microeconomics.
Ans: It analyzes the behaviors of individual economic units—households and firms—and their interactions in specific markets, explaining how prices and quantities are determined.
9. Write short note on macroeconomics.
Ans: This branch of economics deals with the economy as a whole, studying aggregate phenomena like national income, inflation, unemployment, and fiscal and monetary policies’ impact on economic growth and stability.
10. Explain the importance of microeconomics.
Ans: Importance of Microeconomics: Microeconomics is crucial as it helps in understanding individual market behaviors, consumer preferences, producer decisions, and the efficient allocation of resources at a micro-level, contributing to overall economic efficiency and welfare.
11. Explain the importance of macroeconomics.
Ans: Importance of Macroeconomics: Macroeconomics is vital in comprehending and managing the entire economy, addressing issues like unemployment, inflation, economic growth, and stability. It helps policymakers implement measures to achieve sustainable growth and maintain stability in the economy.
12. Define normal goods, inferior goods, economic goods, free goods, and Giffen goods.
Ans: Definitions:
Normal Goods: These are goods whose demand increases as consumer income rises.
Inferior Goods: Goods for which demand decreases when consumer income increases.
Economic Goods: Scarce goods that have an opportunity cost because of their limited supply.
Free Goods: These are naturally abundant goods that are not scarce and do not have an opportunity cost.
Giffen Goods: Unique goods where demand rises when the price increases, usually due to extreme income constraints and lack of substitutes.
13. Explain the features of land.
Ans: Features of Land: Land is a natural resource characterized by its fixed supply, differing qualities, locations, and the fact that it’s not produced by human effort.
14. What are the features of labour? Explain
Ans: Features of Labor: Labor involves human effort, skills, and capabilities. It is variable in quantity and quality and is mobile, allowing people to move between occupations or locations for work.
15. Explain the features of capital.
Ans: Features of Capital: Capital represents man-made goods used in the production process. It can be physical (machinery, equipment) or financial (money used for investment) and contributes to enhancing productivity.
16. Explain the features of organization.
Ans: Features of Organization: Organization involves efficiently combining factors of production, making strategic decisions, managing risks, and coordinating resources to achieve business goals and objectives. It encompasses effective planning, structuring, and managing of resources within a business or industry.
LONG ANSWER TYPE QUESTIONS
1. Critically explain the Adam Smith’s definition of economics. Or, ‘Economics is a science of wealth.’ Discuss.
Ans: Adam Smith, in his seminal work “The Wealth of Nations,” described economics as a science that explores how individuals pursuing their self-interest in a market system contribute to the overall wealth of a nation. He emphasized the significance of free markets, specialization, and the division of labor in fostering economic growth and societal progress. Smith’s concept of the “invisible hand” suggests that individual pursuits collectively benefit society, as if guided by an unseen force, leading to the optimal allocation of resources.
2. Critically explain the Marshallian definition of economics.
Ans: Alfred Marshall emphasized the welfare aspect in defining economics. He considered economics as the study of human welfare and behavior in allocating scarce resources among various competing ends. Marshall focused on the dynamics of supply and demand, underscoring their influence on determining prices and individual as well as social welfare.
3. Critically explain the definition of economics given by Lionel Robbins.
Ans: Robbins’ definition of economics centered on the fundamental concept of scarcity. He saw economics as the science that studies human behavior concerning scarce resources, which have alternative uses. His definition stressed the importance of choice, scarcity, and opportunity cost in decision-making processes.
4. Compare the definition of economics given by Robbins and Marshall. Which definition is superior and why?
Ans: Both definitions consider the allocation of scarce resources but differ in emphasis. Robbins’ definition explicitly focuses on the economic problem of scarcity, underscoring the necessity of making choices due to limited resources. Marshall’s definition, while acknowledging scarcity, places more emphasis on welfare and behavior in economic decision-making. The choice of superiority between the two definitions could depend on the specific context or perspective, but Robbins’ definition might be considered more comprehensive due to its explicit attention to scarcity and choice.
5. What do you mean by micro and macroeconomics? Explain their importance.
Ans: Microeconomics concentrates on individual economic units such as households and firms, examining their behaviors, interactions, and decision-making processes within specific markets. Understanding microeconomics aids in comprehending individual choices, market dynamics, and resource allocation at a granular level. Macroeconomics, on the other hand, delves into the broader economy, analyzing aggregates like national income, unemployment, inflation, and overall economic growth. It helps policymakers formulate and implement policies aimed at stabilizing the economy, managing inflation, and promoting growth.
6. Explain the concept of positive and normative economics with examples.
Ans: Positive economics involves objective analysis based on data and evidence, aiming to describe and explain economic phenomena without personal biases. For instance, analyzing the impact of tax cuts on employment by examining historical data. In contrast, normative economics involves subjective opinions and value judgments about what should or ought to happen in the economy, often based on personal beliefs or ethical considerations, like arguing for a higher minimum wage based on principles of fairness or equity.
7. What do you mean by factors of production? Explain the features of land and labour.
Ans: Factors of production are the resources used in the production process, including land, labor, capital, and entrepreneurship. Land refers to natural resources with varying qualities and locations, while labor involves human effort, skills, and mobility. Land’s features include its fixed supply and natural quality, while labor’s features encompass variability in skill, quantity, and mobility, making it a crucial factor in the production process and economic growth.
