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NIOS Class 10 Economics Chapter 1 What is Economics?
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What is Economics?
Chapter: 1
MODULE 1: UNDERSTANDING ECONOMICS
TEXTBOOK QUESTIONS (SOLVED)
INTEXT QUESTIONS 1.1
Q. 1. “Economics is a science of wealth.” What does this imply?
Ans. As a science of wealth, economics implies that as science explains nature and causes of wealth, creation of wealth by individuals and nations etc.
Q.2. Which aspects of welfare does economics as a science of wealth?
Ans. Economics as a science of wealth deals with quantitative aspects of welfare.
INTEXT QUESTIONS 1.2
Q.Write whether the following statements are true or false:
(i) Inflation is studied under micro-economics.
Ans. False.
(ii) Determination of price of a good is a problem under macro-economics.
Ans. False.
(iii) Macro-economics deals with the issue of employment and unemployment.
Ans. True.
(iv) Macro-economics deals with individual decision making with respect to buying a good.
Ans. True.
INTEXT QUESTIONS 1.3
Q. 1. Identify the following statements as positive or normative:
(i) India has a large number of poor people.
Ans. Positive.
(ii) The government should spend more on education.
Ans. Normative.
(iii) Poor people are suffering due to price rise of essential commodities.
Ans. Positive.
(iv) Bank has increased its interest rate.
Ans. Normative.
(v) People should be encouraged to save in post-offices and commercial Yosh banks.
Ans. Positive.
TERMINAL EXERCISE
Q. 1. “Economics is science of scarcity and choice.” Explain.
Ans. Economics as a science of scarcity and choice: Many definitions of economics have been given. One of them is the welfare definition of economics. This definition explained only the material aspects of welfare and neglected the non-material aspect. So a new definition of economics was put forward and economics was treated as science of scarcity and choice. We know that the resources available with every individual are scare. So people try to achieve their goals by alternative use of those resources which they do by making appropriate choice. As a science of scarcity and choice, economics studies human behaviour as relationship between ends and means which are scare and have alternative uses.
Here ends imply wants “scare” means imply limited resources. According to the scarcity definition, limited resources can be used alternatively.
Q. 2. How does wealth definition of economics differ from welfare definition of economics?
Ans. Wealth definition of economics deals with the phenomenon of wealth which include nature and causes of wealth, creation of wealth by individuals and nations etc. It does not talk about the people who has no wealth. It divides the society into “rich” and “not rich” or poor. On the other hand welfare definition of economics addresses the issue of a “welfare of society” and not just wealth. As a science of welfare, economics is concerned with the quantitative welfare only and not with the qualitative welfare of the society.
Q. 3. Differentiate between micro and macro-economocs.
Ans. Differences between Micro-Economics and Macro-Economics.
| Micro-Economics | Macro-Economics |
| 1. Micro-Economics deals with the behaviour of individual economic units. | 1. Macro-Economics is the study of the economy as a whole. |
| 2. It deals with the economic activities of a firm or an industry. | 2. It deals with the aggregates like, aggregate demand, supply, employment, national income, expenditure etc. |
| 3. In this, we are concerned with the determination of equlibrium level of prices of goods and factors. | 3. In this, we are concerned with the determination of equilibrium level of output, employment and income for the economy. |
| 4. Demand and supply are the tools of micro- economic analysis. | 4. Aggregate demand and aggregate supply are the main tools of macro-economies analysis. |
| 5. Micro-Economics explains how resources are allocated among various goods and services and how national income is distributed in the economy. | 5. Macro-Economics explains how productive capacity and national income of the country increases over time. |
Q. 4. Distinguish between Positive and Normative Economics by giving example.
Ans. Difference between Positive and Normative Economics: Positive economics is that economics which studies a problem and its related issues which can be verified like the extent of poverty and unemployment. On the other hand, normative economics is that economics which offers suggestions to the problems like the suggestion of reservation in jobs to solve the problem of poverty.
Example of Positive Economics: India is the second largest populated country in the world.
Example of Normative Economics: India should not allow its population to grow so fast. It must control its population.
SOME IMPORTANT QUESTIONS FOR EXAMINATIONS
VERY SHORT ANSWER TYPE QUESTIONS
Q.1. “As a science of scarcity and choice, economics studies human behaviour and relationship between ends and means.”
What do “ends” and “scare means” imply here?
Ans. Here “ends” implies “wants” and “scare means” implies “limited resources”.
Q.2. Write down the two features resources.
Ans. Features of Resources:
1. Resources are limited.
2. Limited resources can be used alternatively (i.e. they have alternative uses).
Q.3. Why are USA, European countries, Japan etc. are called developed economies?
Ans. USA, European countries, Japan etc. are called developed economies because they have achieved higher level of income for their citizens.
Q.4. What are the economics around the world doing to achieve higher level of growth and development?
Ans. Economics around the world have been exploiting natural resources and polluting the environment.
Q.5. Why are some resources like minerals, mineral oil, forests are depleting?
Ans. Because of their rising consumption by the present generation.
Q.6. What is our moral duty in context of available resources?
Ans. It is our moral duty to use available resources judiciously, efficiently and ensure welfare of our future generation.
Q.7. what does the word “Micro” mean?
Ans. The word “Micro” means very small.
Q.8. Why is “inflation or price rise the study of macro-economics?
Ans. Because “inflation or price rise” does not affect an individual only but it also affects the whole economy.
Q.9. Why is the following statement a positive statement ?
India’s population has closest 100 crore mark.
Ans. Because the statement given in the question gives a phenomenon which is happening.
Q.10. Why it is not easy to give precise definition or meaning of Economics?
Ans. Because Economics is a vast subject and its scope and the area it covers are very large.
Q.11. What is the problem with the definition of economics of a science of wealth?
Ans. The problem with the definition of economics as a science of wealth is that it does not talk about people who have no wealth. It divides the society with “rich” and “not rich” or poor.
Q.12. Name the two aspects of welfare.
Ans. (i) Quantitative aspect.
(ii) Qualitative aspect.
Q.13. Give two examples of quantitative aspects of welfare.
Ans. Two examples of quantitative of welfare are as follows:
(i) Consumption of goods and services.
(ii) Increase in per capita income.
Q.14. Give two examples of qualitative aspect of welfare.
Ans. Two examples of qualitative aspect of welfare are as follows:
(i) Living in peace.
(ii) Acquiring knowledge.
Q.15. What have the economics around the world been doing to achieve higher level of growth and development?
Ans. In order to achieve higher level of growth and development, economics around the world have been exploiting natural resources and polluting the environment.
Q.16. Why are some resources like minerals, mineral oil, forests are depleting fast?
Ans. Some resources like minerals, mineral oil and forests are depleting fast because of their rising consumption by present generation.
Q.17. What is moral duty with reference to available resources?
Ans. It is our moral duty to use the available resources judiciously, efficiently and ensure welfare of our future generation.
Q.18. Why is the study of consumer’s equilibrium a subject-matter of micro- economics?
Ans. Because consumers is a small unit.
Q.19. What is the relationship between scarcity and choice?
Ans. Scarcity and choice go together.
Q.20. What is economics all about?
Ans. Economics is about the making choices in the presence of scarcity.
Q.21. Suppose you are the richest person on the earth. Can you get anything you wish to get anytime? Give reason in support of your answer.
Ans. Certainly not. No matter how much resources you have, they are scare in relation to your wants.
Q.22. Choice results due to what?
Ans. Choice results due to scarcity.
Q.23. When does choice emerge?
Ans. emerges when limited resources are to be used for the satisfaction of unlimited wants.
Q.24. Which type of economics (Micro or Macro) we are referring when economic problems/issues are studied considering small economic units like an individual consumer or an individual producer?
Ans. We are referring micro-economics.
Q.25. Name any two theories which vital components of micro- are economics.
Ans. (i) Theory of demand and price.
(ii) Theory of supply and producer behaviour.
Q.26. Are positive statements are statements of truth?
Ans. No, they may also be the statements of false.
Q.27. At present, the population of India is 120 crore. A man says that the population of India is 80 crore. Is his statement a positive statement? Give reason in support of your answer.
Ans. Though statement is false, but even then it is a positive statement because it describes what it is and this statement can be verified.
Q. 28. Name the two branches of Economics.
Ans. (i) Micro-economics. and
(ii) Macro-economics.
Q. 29. Which branch of economics deals with economic aggregate at the level of the whole economy?
Ans. Macro-economics.
Q. 30. Which branch of economics studies the problem of unemployment, economic growth and development ?
Ans. Macro-economics.
Q.31. Which aspect of the things is involved by economic decision making by individuals or government or business firms?
Ans. Both positive and normative aspects of the things are involved in economic decision making by individuals or government or business firms.
Q.32. Economics as a subject-matter of social science has been treated as a science of what?
Ans. Economics as a subject-matter of social science has been treated as a science of
(a) wealth.
(b) welfare.
(c) scarcity and choice.
(d) growth and development.
(e) sustainable development.
SHORT ANSWER TYPE QUESTIONS
Q.1. Focus any two major ideas involving the meaning of economics.
Ans. Two major ideas involving the meaning of Economics: Many major ideas are involved in the meaning of economics.
Two of them have been focussed below:
(i) Science of Wealth: Many scholars and authors in the last eighteenth and early nineteenth century believed that economics is the science of wealth. These scholars are classical thinkers. They viewed that economics deals with the phenomenon of wealth which includes nature and causes of wealth creation of wealth by individuals and nation. This definition of economics has been criticised on the ground that it divides the society into rich and poor.
(ii) of Welfare: Many scholars in the early 19th century viewed that economics is the science of welfare and not just wealth. But this definition has been criticised on the ground that it is concerned only with the quantitative aspect of welfare. It ignores qualitative aspect of welfare such as living in peace, enjoying leisure etc.
Q.2. Explain economics as a science of growth and development.
Ans. Economics as a Science of Growth and Development: It is argued that for an individual to be able to satisfy his/ her wants, it is necessary that the whole economy must grow and find proper mechanism to distribute the growth among the individual citizens. So performance of the economy is very important in term of use of its resources and production and distribution of goods and services. The economy must allocate its resources among various alternative activities ensure the effective use and find ways also as to how they would grow for future development of the economy.
Q.3. Name the various aspects of welfare with examples. Which aspect of welfare is neglected by the definition of economics as a science of welfare?
Ans. Various aspects of welfare: Welfare has aspects namely
(i) quantitative aspect. and
(ii) qualitative aspect.
Examples of Quantitative Aspect:
(i) Consumption of goods and services. and
(ii) Increase in per capita income.
Examples of Qualitative Aspect:
(i) Living in peace. and
(ii) Acquiring knowledge.
Qualitative aspect of welfare has been neglected by the definition of Economics as a Science of Welfare.
LONG ANSWER TYPE QUESTIONS
Q.1. Focus the major ideas involving the meaning of economics.
Ans. Major ideas involving the meaning of Economics: Following are major ideas involving the meaning of economics:
(i) Economics as a Science of Wealth: Many scholars and authors in the late eighteenth and early nineteenth century believed that Economics is the Science of Wealth. They viewed that economics deals with the phenomenon of wealth which includes nature and causes of wealth, creation of wealth by individuals and nations etc.
(ii) Economics as a Science of Welfare: The wealth definition of economics was criticised on the ground that it did not talk about people who had no wealth. So many scholars in the 19th century defined economics as a “Science of Welfare”. Economics as a “Science of Wealth” was said to be concerned with the quantitative welfare only.
(iii) Economics as a Science of Scarcity and Choice: The welfare definition of economics explained only material aspect of But people want both material goods and non-material services. So this definition has been rejected. Now economics was treated as “Science of Scarcity and Choice”. As science of scarcity and choice, economics studies human behaviour as relationship between ends and means which are scare and have alternative uses.
(iv) Economics as a Science of Growth and Development: Now-a-days people talk about the well-being of individual and the whole nation. It is understood that for an individual to be able to satisfy his/her wants, it is necessary that the whole economy must grow and find proper one mechanism to distribute the benefits of growth among the individual citizen. So now economics is treated as the science of growth and development.
(v) Economics as a Science of Sustainable development: Economists of late 20th century have also started talking about welfare of future generation and protection of environment. Hence economics is also treated as a science of sustainable development.
Q.2. Give (cite) some examples of economic decisions taken by an individual which the subject matter of micro-economics.
Ans. Examples of Economic Decisions: Below are given the examples of economic decisions taken by the individuals becoming the part of macro-economics:
(i) Decisions with regard to quantity of the goods to be purchased at given price so as to get maximum satisfaction as a buyer (Demand Theory).
(ii) Decisions regarding the quantity to be supplied at a given price so that he/she can earn some profit (Theory of Supply).
(iii) Determination of prices in the market (Theory of Price Determination).
(iv) Decisions regarding the combination of the various factors of production so that maximum output can be produced at minimum cost (Theory of Production).
Q.3. Write down the scope of Macro- Economics. Why is it known as the theory of Income and Employment?
Or
Write down the subject-matter of Macro-Economics.
Ans. Subject-matter of Macro-Economics: Subject-matter of Macro-Economics is as under:
(i) Aggregate consumption expenditure of a country.
(ii) National income of a country.
(iii) Study of inflation or price-rise.
(iv) Problem of unemployment.
(v) Economic growth and development.
