Class 11 Economics Chapter 1 Introduction, (Assam Higher Secondary Education Council) AHSEC Class 11 Economics Question Answer in English Medium each chapter is provided in the list of AHSEC so that you can easily browse through different chapters and select needs one. Assam Board Chapter 1 Introduction Class 11 Economics Question Answer can be of great value to excel in the examination.
AHSEC Class 11 Economics Chapter 1 Introduction
Class 11 Economics Chapter 1 Introduction Notes cover all the exercise questions in SCERT Textbooks. The SCERT Class 11 Economics Chapter 1 Introduction Solutions provided here ensure a smooth and easy understanding of all the concepts. Understand the concepts behind every chapter and score well in the board exams.
Introduction
Chapter – 1
PART – A
VERY SHORT ANSWER QUESTIONS
1. Define goods.
Ans: Goods are such items which can be touched and seen and also can be used to provide satisfaction of wants.
2. Define service.
Ans: Services are such activities which are economically used to provided satisfaction and they are also intangible in nature.
3. Define individual.
Ans: A group of a unit, such as, a consumer, a producer etc., Which performs different economic activities is known as an individual.
4. What is resource in economics ?
Ans: The means or ways to solve various economic problems are known as resources.
5. Why does an individual need resources ?
Ans: To satisfy his needs.
6. Mention the factor that gives rise to the problem of choice in economics.
Ans: Scarcity of resources having alternative uses in relation to their demand.
7. Fill in the blanks:
The allocation of ___ resources and distribution of the final goods and services are the central problems of any economy.
Ans: Limited
8. Fill in the blanks:
Opportunity cost is also called the ___ cost.
Ans: Economic.
9. What is the meaning of market centrally planned economy.
Ans: In a centrally planned economy, the government or the central authority plans all the important activities in the economy.
10. What is the meaning of market in economics.
Ans: The place where the buyers and sellers come contact with each other, physically or not and where purchase and sale of a commodity takes place, is called market.
11. What is a market economy ?
Ans: A market is an institution which organises the free interaction of individuals pursuing their respective economic activities. In a market system, all goods and services come with price at which the exchanges take place.
12. What is a mixed economy ?
Ans: Under mixed economics, some economic activities are controlled by the government while others are left to be managed by the people as they wish. In mixed economic system, both private and public or government sector co-exists. Production is undertaken for profit motive.
13. Is India economy a centrally planned economy ?
Ans: No, India economy is a mixed economy which combines the features of both centrally planned and market economy.
14. What is positive economic analysis ?
Ans: In economics, we try to analyse the different mechanisms and figure out the outcomes which are likely to result under each of these mechanisms. In positive economics analysis, we study how the different mechanisms function. It describe what was, what is and what would be under the given set of circumstances.
15. What is normative economics ?
Ans: Normative economic analysis study of which relates to; what ought to be? It’s objective is to determine the norms or aims. It gives suggestions and expresses opinions. Some of its statements cannot be verified. Normative economic analysis offer several suggestions, such as; prices should be established, distribution of income should be equal, rich should pay more taxes and the poor should get higher wages etc.
16. Write true or false:
(a) In a market economy all economic activities are organised through the market.
Ans: True.
(b) It is the scarcity of resources that gives rise to the problem of choice.
Ans: True.
(c) In economics, market refers to a specific place.
Ans: False.
17. Choose the correct answer:
In a centrally planned economy all the important decisions regarding production, exchange, consumption etc. are made by the ____.
(a) Central Bank
(b) Market
(c) Government
Ans: (c) Government
18. Choose the correct answer:
In reality all economics are ___ economics where some important decisions are taken by the government and the economic activities are by and large conducted through the market.
(a) Socialistic
(b) Mixed
(c) Capitalistic
Ans: (b) Mixed
19. Fill in the blanks:
In ____ economic analysis, we study how the different mechanisms function.
Ans: Positive.
20. Name the economist who is well known as the father of economics.
Ans: Adam Smith.
21. Define economic problem.
Ans: Economic problem is basically the problem of making choices in the use of scarce for the satisfaction of unlimited wants.
22. State two features of resources that give rise to an economic problems.
Ans: (i) limited resources.
(ii) Resources have alternative uses.
23. Define marginal opportunity cost.
Ans: Marginal opportunity cost( or marginal rate of transformation) is the ratio of units of one good sacrificed to produce one more unit of other good.
24. Give one reason for a rightward shift in PPF ( Production Possibility frontier).
Ans: Discovery of new resources.
25. Give two examples of growth of resources.
Ans: (i) Discovery of new natural resources.
(ii) Availability of new and better production technology.
SHORT ANSWER QUESTIONS TYPE – II : (MARKS : 3)
1. Define and distinguish goods and services by citing one example each.
Ans: Goods are such items which can be touched and seen and also can be used to provide satisfaction of wants.
Services are such activities which are economically used to provide satisfaction and they are also intangible in nature.
Examples of goods : Car, washing Machine.
Example of Services : Insurance, Shipping.
2. Clearly state the concept of opportunity cost.
Ans: The opportunity cost of any good is the next best alternative good that is sacrificial. The production of a particular commodity involves sacrifice of another commodity, which could have been produced by using the same amount of resources. For example, a farmer on a acre of land produce 60 kgs of wheat by using a given quality of resources. Further suppose, he can also produce 50 kgs of potatoes( which is the best alternative) with the same amount of factors of production. Here, the opportunity cost of 60 kgs of wheat is 50 kgs of potatoes.
3. Distinguish between positive economics and normative.economics.
Ans: Distinction between positive and normative economics are in positive economic analysis, we study how the different mechanisms function. It analyses their causes and effects. No moral judgements are passed by a positive economist. And in normative economics, we try to know which of these mechanisms is desirable. As a normative science, economics passes judgements.
4. Give the meaning of microeconomics and macroeconomics.
Ans: Microeconomics studies problems related to choice or allocation of resources at the level of an individual, a firm, a household or an industry. Macroeconomics studies problems related to choice or allocation of resources at the level of economy as a whole.
5. Mention three basic problems of an economy.
Ans: The central problems of an economy are discussed as follows:
(a) What is produced and in what quantities: Every society must decide on how much of each of the many possible goods and services it will produce. Whether to produce more of food, clothing, housings or to have more of luxury goods. Whether to have more agricultural goods or to have industrial products and services. Whether to use more resources in education and health or to use more resources in building military services. Whether to have more of basic education or more of higher education.
(b) How are these produced: Every society has to decide on how much of which of the resources to use in the production of each of the different goods and services. Whether to use more labour or more machines. Which of the available technologies to adopt in the production of each of the goods.
(c) For whom are these goods produced: Who gets how much of the goods that are produced in the economy? How should the product of the economy be distributed among the individuals in the economy? Who gets more and who gets less? Whether or not to ensure a minimum amount of consumption for every one in the economy. Whether or not elementary education and basic health services should be available freely for everyone in the economy.
6. What is government intervention ? When does the government intervene in production and distribution of a good or service ?
Ans: When government influences all the economic activities by its own decision, it is call government intervention.
When crisis occurs in an economy the govt. intervene in its production and distribution.
7. State how economic activities are organised in a mixed economy.
Ans: Under mixed economics, some economic activities are controller by the government while others are left to be managed by the people as they wish. In mixed economic system, both private and public or government sector co-exists. Production is undertaken for profit motive.
8. Explain the concept of centrally planned economy.
Ans: In a centrally planned economy, the government or the central authority plans all the important activities in the economy. All important decision regarding production, exchange and consumption of good and service are made by the government. The central authority may try to achieve a particular allocation of resources and a consequent distribution of the final combination of goods and services, which is thought to be desirable for society as a whole.
9. Mention three basic features of market economy.
Ans: Three basic features of market economy are as follows:
(a) All decision are taken by price mechanism.
(b) People are motivated by profits.
(c) Means of production are served by private individuals.
10. Mention three basic characteristics of mixed economy.
Ans: three basic characteristics of mixed economy are:
(a) Means of production are partly owned by the state and partly by the individuals.
(b) Price mechanism exist in a mixed economy but it is not totally free.
(c) Individual enjoy freedom of occupation as well as freedom of consumption. But this freedom is not permitted to work against the social welfare of the society.
11. Mention any three causes behind the central economic problem of an economy.
Ans: The causes behind the central economic problem of an economy are as follows:
(a) Unlimited human wants: Every human being requires varieties of good and services for maintaining improving his/her standard of living.
(b) Limited Resources: Production of various good and services requires resources like land and capital, human resources. However compared to the unlimited wants for various good and services these resources seems to be insufficient.
(c) Resources have alternative uses: Resources are not only limited but also have alternative uses for escape a piece of land can be used for farming for a playground or for constructing a shopping mall or, dwelling units. It’s implications it that a resources can be used at a time for only one purpose.
SHORT ANSWER QUESTIONS TYPE – I : (MARK : 4)
1. Explain the concept of production possibility frontier with suitable diagram.
Ans: Production possibility frontier or curve showing alternative production possibilities of two sets of goods, with the given resources and technique of production. In the words of Samuelson, ‘Production possibility curve is that curve which represents the maximum amount of a pair of goods or services that can both be produced with an economy’s given resources and technique, assuming that all resources are fully employed.’ we can explain production possibility frontier or curve with the help of diagram.Supposing an economy decide to produce only two goods, namely wheat and cloth, with its available resources and given technology. Different possibilities of production of wheat and cloth are shown in the production possibly schedule :
The above schedule shows that if production is carried out under ‘A’ combination, then 100 lakh tones of wheat alone will be produced without any production of cloth. On the contrary, if production is obtained under ‘E’ combination, then 4000 bales of cloth alone will be produced without any production of wheat. Besides, these extreme limits, there are many alternative possibilities of production of wheat and cloth.
In the figure, the quantity of cloth is represented on ox axis and wheat on oy axis. The first production possibility is 100 lakh tones of wheat and cloth. That is marked as A. Similarly, point B, C and D represents different combination of wheat and cloth. Point E represents production possibility of 4000 bales of cloth and no wheat. By combining all these points, we get the curve AE. It is the production possibility frontier or curve.
2. Explain the central problems of an economy.
Ans: The central problems of an economy are follows:
(a) What is produced and in what quantities : Every society must decide an how much of each of the many possible goods and services it will produce. Whether to produce more of food, clothing, housing or to have more of luxury goods. Whether to have more agricultural goods or to have industrial products and services. Whether To use more resources in education and health or to use more resources in building military services. Whether to have more of basic education or more of higher education.
(b) How are these produced : Every society has to decide on how much of which of the resources to use in the production of each of the different good and services. Whether to use more labour or more machine. Which of the available technologies to adopt in the production of each of the goods.
(c) For whom are these goods produced : Who gets how much of the goods that are produced in the economy ? How should the product of the economy be distributed among the individuals in the economy? Who gets more and who gets less? Whether or not to ensure a minimum amount of consumption for every one in the economy. Whether or not elementary education and basic health services should be available freely for everyone in the economy.
Thus, the allocation of scarce resources and the distribution of the final goods and services are the central problems of any economy.
3. Explain the meaning of the production possibilities of an economy.
Ans: Production possibility frontier or curve showing alternative production possibilities of two sets of goods, with the given resources and technique of production. In the words of Samuelson, ‘Production possibility curve is that curve which represents the maximum amount of a pair of goods or services that can both be produced with an economy’s given resources and technique, assuming that all resources are fully employed.’ we can explain production possibility frontier or curve with the help of diagram.Supposing an economy decide to produce only two goods, namely wheat and cloth, with its available resources and given technology. Different possibilities of production of wheat and cloth are shown in the production possibly schedule :
The above schedule shows that if production is carried out under ‘A’ combination, then 100 lakh tones of wheat alone will be produced without any production of cloth. On the contrary, if production is obtained under ‘E’ combination, then 4000 bales of cloth alone will be produced without any production of wheat. Besides, these extreme limits, there are many alternative possibilities of production of wheat and cloth.
In the figure, the quantity of cloth is represented on ox axis and wheat on oy axis. The first production possibility is 100 lakh tones of wheat and cloth. That is marked as A. Similarly, point B, C and D represents different combination of wheat and cloth. Point E represents production possibility of 4000 bales of cloth and no wheat. By combining all these points, we get the curve AE. It is the production possibility frontier or curve.
4. Distinguish market economy from centrally planned economy.
Ans: In a centrally planned economy, the government or the central authority plans all the important activities in the economy. All important decision regarding production, exchange and consumption of good and service are made by the government. The central authority may try to achieve a particular allocation of resources and a consequent distribution of the final combination of goods and services, which is thought to be desirable for society as a whole.
Again, in a market economy, all economic activities are organised through the market. A market is institutions which organises the free interaction of individuals pursuing their respective economic activities. In a market system all goods and services come with Price at which the exchanges take place. The price reflects on an average, the society’s valuation of the goods or services in question. If the buyers demand more of a certain good,the price of that good will rise. In this way, prices of goods and services send important information to all the individuals across the market and help achieve coordination in a market system. Thus, in a market system, central problems regarding how much and what to produce are solved through the coordination of economic activities brought about by the price signals.
5. Explain how does a market economy solve the central problems of the economy.
Ans: Economics studies the economic aspect of the social life of man.The subject matter of economics are discussed below:
(a) The main subject matter of economics is to study the economic activities of man and society. Economics studies how these unlimited wants of man can be satisfied with limited resources.
(b) Money is required to purchase good for satisfying our wants which are scarce in supply. Money is the medium of exchange. Thus, these wants and the economic activities for satisfying our wants are also the subject matter of economics.
(c) Unlimited wants of man and limited resources have created economics problems. Different economic problems of the society and there solution are the subject matter of economics.
(d) As the scarce have alternative uses, they have to face the problem of choice. This choice is another important subject matter of economics.
(e) In modern society, men require various type of goods for satisfying their wants, all of which they cannot produce. This, consumption, production exchange and distribution are also the main subject matter of economics.
6. ” A typical production possibility curve slopes downward from left to right.”
Ans:
” A typical production possibility curve slopes downward from left to right.” This implies that in order to produce more of one good, some units of the other good must be scarified. It can be explain with the help of a diagram.
In the diagram good x is measured in the ox axis and good y is measured in the y axis. It is shown in the diagram when we more downward along the production possibility curve from point A to B and then from B to C the output of Y produced reduces as the output of X increases. Since the PPC relates to the full employment of resources then as more of x is produced, resources have to be shifted from the production of Y to the production of X. This results in the loss of Y production.
7. Draw and explain the shape of a PPC.
Ans: A production possibilities curve is concave to the origin production possibilitiy curve represents graphically alternative production possibilities facing an economy.
Let us assume that there is a given amount of productive resources for the production of two goods namely, Guns and butter PPC can be better understood with the help of following schedule.
In figure butter is taken along the X axis and guns along the Y axis. At one extreme combination i.e. point ‘A’ there are zero units of butter and 21 units of guns point ‘G’ is the other extreme, where all the resources go into butter. In between there are various possibilities with different combination of guns and butter when points A,B,C,D,E,F and G are joined, we get a curve AG. This curve is known as production possibility curve.
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