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Class 9 Social Science Economics Chapter 1 Basic Concepts Of Economics
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Basic Concepts Of Economics
Chapter: 1
ECONOMICS
Give Very Short Answer:
Q1. The word ‘economics’ has been derived from the word of language?
Ans: The word ‘economics’ has been derived from Greek.
Q2. The word ‘economics’ has been derived from which word?
Ans: The Greek word ‘oikonomia’.
Q3. Who is the father of economics?
Ans: Adam Smith is the father of economics.
Q4. Who has given the wealth-based definition of economics?
Ans: Adam Smith.
Q5. Who has given the welfare-based definition of economics?
Ans: Alfred Marshall.
Q6. Who has given the scarcity definition of economics?
Ans: The scarcity definition of economics is Lionel Robbins.
Q7. In which book and when did Adam Smith give his definition of economics?
Ans: In his book, ‘An Enquiry into the Nature and Causes of the Wealth of Nations’ published in 1776.
Q8. In which book and when did Alfred Marshall give his definition of economics?
Ans: In his book, ‘Principles of Economics’ published in 1890.
Q9. In which book and when did Lionel Robbins give his definition of economics?
Ans: In his book, ‘An Essay on the Nature and significance of Economic Science.
Q10. Who said that the definition of economics given by Adam Smith is the ‘Gospel of the Mammon’?
Ans: Carlyle and Ruskin.
Q11. Who offered the definition of economics based on efficiency?
Ans: Adam Smith.
Q12. What is the power of a commodity to satisfy human wants called?
Ans: Utility.
Q13. What are the produced means of production called?
Ans: Capital is the produced means of production.
Q14. The words ‘micro’ and ‘macro’ have been derived from which words?
Ans: Micro Economics word is derived from Greek word Mikros, which means small. Macro Economics is derived from Greek word Makros which means large.
Give Short Answer:
Q1. Write the definition of economics given by Adam Smith.
Ans: Adam Smith, who is considered as the father of economics, in his famous book, ‘An Enquiry into the Nature and Causes of the Wealth of Nations’ published in 1776, defined economics as ‘the science of wealth. This definition is considered as a wealth-based definition.
Smith’s definition was criticised by later social scientists like Carlyle and Ruskin as being the ‘Gospel of the Mammon’. Wealth can never be the main aim of human life. It is only a means of achieving this. Too much emphasis on wealth would turn economics into a ‘dismal science’.
Q2. Write the definition of economics given by Marshall.
Ans: Cambridge economist, Alfred Marshall, in his book ‘Principles of Economics’ published in 1890 put forward a definition of economics based on the principles of welfare. According to him, Economics is the study of mankind in the ordinary business of life. It examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus, it is on the one side, a study of wealth and on the other, and more important side, a part of the study of man.
Marshall’s definition is an improvement on Smith’s definition, How-ever, Marshall’s definition did not earn the distinction of being the acceptable definition of economics. This is because Marshall only mentioned about the welfare derived from material goods. Welfare derived from non-material services such as those of a teacher or doctor where not mentioned by him. Moreover, all goods may not bring about welfare of the people. For example, use of alcohol, drugs, cigarettes do not lead to the increase in the welfare of man. But economics deals with the study of the production, consumption and distribution of such products.
Q3. Write the definition of economics given by Robbins.
Ans: Economist Lionel Robbins, in his book, ‘An Essay on the Nature and significance of Economic Science’ published in 1932, put forward the most acceptable definition of economics. According to him, ‘Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. This definition highlights three main points- (i) Human wants are unlimited, (ii) Resources to satisfy human wants are limited, (iii) Scarce resources have alternative uses.
These three points give rise to economic problems or problems of choice. The problem of deciding which want among the unlimited wants is to be fulfilled by using the scarce resources with alternative uses is called economic problem or problem of choice. Robbins’ definition is also called the definition of scarcity. Robbins’ definition is also not above criticism. According to the critics, the problem of attaining present economic betterment is more important than the problem of choices. But Robbins is silent on this point.
Q4. Write the definition of economics given by Samuelson and Nordhaus.
Ans: According to economist Samuelson and Nordhaus, the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.
Q5. What are the basic concepts of the definition of economics given by Robbins?
Ans: The basic concepts of the definition of economics given by Robbins are:
1. Human wants are unlimited
2. Resources to satisfy human wants are limited
3. Scarce resources have alternative uses.
Q6. What is microeconomics?
Ans: Microeconomics is the study of individuals, households and firms’ behaviour in decision making and allocation of resources. It generally applies to markets of goods and services and deals with individual and economic issues.
The term ‘microeconomics’ is originated from the Greek prefix ‘mikros’ which means ‘small’.
Q7. What is macroeconomics?
Ans: The term ‘macroeconomics’ is originated from the Greek prefix ‘makros’ which means ‘large’. Macroeconomics is a branch of economics that deals with the performance, structure, behaviour, and decision-making of an economy as a whole.[1] This includes regional, national, and global economies. Macroeconomists study topics such as output/GDP (Gross Domestic Product) and national income, unemployment (including unemployment rates), price indices and inflation, consumption, saving, investment, energy, international trade, and international finance.
Q8. Show the difference between free goods and economic goods.
Ans: The difference between free goods and economic goods are:
free goods:
1. These goods are limited in supply.
2. These goods do not command any price. These are available free of cost.
3. These are free gifts of nature.
4. No such resources are required in their production.
economic goods:
1. These goods are available in abundant amount..
2. These goods command price. To obtain such goods one has to pay price.
4. Scarce resources are used to produce such goods.
3. Economic goods are man-made.
Q9. What is national income?
Ans: National income is the sum total of the value of all the goods and services manufactured by the residents of the country, in a year., within its domestic boundaries or outside. It is the net amount of income of the citizens by production in a year.
Q10. What is per capita income?
Ans: Per capita income is a measure of the amount of money earned per person in a nation or geographic region. Per capita income is used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population.
In other words, Per capita income =
= National income
Total population of the country
Give Long Answers:
Q1. Explain with examples, the importance of the study of economics.
Ans: Economists provide the tools by which analysts can study the costs, benefits and effects of government policies in a range of areas that affect society. These can include healthcare and education. They help guide these decisions to work towards stable economic growth and a thriving society.
(i) The study of Economics is very significant as it studies not only the production, distribution, and consumption of wealth, but also the human resources.
(ii) It analyses the very reality of society which is imperative for fundamental development of any society .
(iii) Inequality, poverty, scarcity of resources, inefficient use of resources are the topics evaluated and discussed in economic studies, which is important for all-round socio-economic development of the nation.
There are several reasons for the necessity/importance of the study of economics.
For example:
(i) A healthy democracy requires civic consciousness of the people.
(ii) A tax paying citizen would surely want to know how the government collects revenue.
(iii) How to spends the collected revenue.
(iv) What rules govern the process of expenditure, is the revenue being spent judiciously, and so on.
A social builder or reformer would want to find out reasons for widespread and abject poverty. When doing that, he will be able to understand that many of the reasons for this problem are economic in nature. As conscious customers, we Would like to know the reasons for the rise in prices of essential commodities. What is globalisation? What are its merits and demerits? What is economic development? What is environmental economics? Important issues such as these are part of the subject matter of economics.
Q2. Which definition of economics is the most acceptable and why? Explain.
Ans: Economist Lionel Robbins, in his book. ‘An Essay on the Nature and significance of Economic Science’ published in 1932, put forward the most acceptable definition of economics. According to him, ‘Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”
This definition highlights three main points:
(i). Human wants are unlimited.
(ii) Resources to satisfy human wants are limited.
(iii) Scarce resources have alternative uses.
These three points give rise to economic problems or problems of choice. The problem of deciding which want among the unlimited wants is to be fulfilled by using the scarce resources with alternative uses is called economic problem or problem of choice, Robbins’ definition is also called the definition of scarcity.” Robbins’ definition is also not above criticism. According to the critics, the problem of attaining present economic betterment is more important than the problem of choices, But Robbins is silent on this point.
Q3. Write about the scope of economics.
Ans: Society wants things that cannot be completely satisfied given the resources available. The scope of economics is addressing this issue. Let’s break it down. Society has unlimited wants like food, water, clothes, roads, houses, video games, phones, computers, weapons, you name them! This list can go on and on, however, the resources to achieve these wants are limited.
Economics is a part of social science. With the evolutionary change of the society and its civilisation, the subject matter of economics has also become dynamic.
The following topics are usually included in the scope of economics.
(i) consumption, (ii) production, (iii) distribution, (iv) exchange, (v) money, (vi) income, (vii) public finance, (viii) welfare economics, (ix) economics of environment, (x) efficiency.
(i) Consumption: The activities which lead to the satisfaction of our wants are known as consumption. The laws governing consumption activities, consumers’ equilibrium, etc. fall within the scope of economics.
(ii) Production: The creation of useful commodities or services is known as production. Besides the four factors of production- land, labour, capital and organisation, the laws of production, producers’ equilibrium, monetary system etc. are discussed in economics.
(iii) Distribution: Consumption is possible only after the produced goods are distributed among the consumers. The laws and theories which are to be followed for the efficient distribution of goods and service are discussed in the study of ‘distribution’.
(iv) Exchange: No individual, region or country can produce all commodities that are required by them. Therefore, in such a situation, exchange becomes necessary between individuals, regions and countries. This exchange takes place through internal and international trade. Both internal and international trade are discussed in economics.
(v) Money: The barter system of exchange had several shortcomings. This creation of money led to the removal of these difficulties and to the simplification of the process of exchange. The discussions on the role of money, its functions, types etc. form an important part of the study of economics.
(vi) Income: The study of Per Capita income, National income, its production and distribution, its relation with economic welfare, fall within the scope of economics.
(vii) Public Finance: Public Finance is the study of public revenue. public expenditure and public debt.
(viii) Welfare Economics: Economics is not merely the study of consumption, production and distribution. The individual and collective welfare aspect of these activities will also have to be taken into account. Economists like A.C. Pigou, Wilfred Pareto, Hickson, Amartya Sen etc, have popularised the concept of welfare economics.
(ix) Economics of Environment: The process of industrialisation to facilitate rapid economic development which has led to the breakdown of environmental equilibrium has caused a great deal of concern among social scientists. The study of the environment has been included in the subject matter of economics in order to find out ways to restore environmental equilibrium. This inclusion has led to the opening up of a new aspect in the scope of economics.
(x) Efficiency: The efficient use of scarce resources to build society is the basic subject of economics. The efficient use of scarce resources to accelerate the process of production will lead to the increase of economic welfare.
The topics mentioned above fall within the scope of economics. But today’s dynamic world, the scope of any subject is never static. With time, the subject matter also becomes dynamic. That is the reason why the inclusion of new concepts of global economics, sustainable development etc. has led to the widening of the scope of economics.
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