Important Questions Class 12 Micro Economics Chapter 1
Important Questions for CBSE Class 12 Micro economics Chapter 1 – Introduction to Micro Economics
With Extramarks, students can directly access Important Questions Class 12 Micro economics Chapter 1 selected by subject matter experts. These questions are also verified and updated on a regular basis to ensure that they align with the recent CBSE Syllabus. Additionally, Extramarks provides a selection of questions that are in line with CBSE evaluation standards. These questions also have answers, further enhancing the learning process.
CBSE Class 12 Micro Economics Chapter-1 Important Questions – Free Download
Study Important Questions for Class 12 Economics (Introductory Micro economics) Chapter 1 – Introduction
Scarcity is the root of all economic problems. It is a condition when there are insufficient resources to satisfy all the people’s needs. Economics is a science that investigates human characteristics that attempt to distribute limited resources so that consumers can be as satisfied as possible, producers can optimise their surplus output, and society can be as stable as possible.
The NCERT Book for Class 12 is divided into two sections: Macroeconomics and Microeconomics. Simply put, microeconomics studies individual economic units, while macroeconomics studies the economy as a whole. It seeks to clarify the economic puzzle of every economy: how, what, and for whom to produce.
A brief explanation of what Microeconomics is, and its distinguishing characteristics, is provided in the chapter titled “An Introduction to Microeconomics.” Class 12 Micro economics Chapter 1 Important Questions include a wide range of topics, such as the types of economies, key issues in microeconomics, macroeconomics and microeconomics, the production possibility curve (PPC), opportunity costs, and marginal opportunity costs.
Students can preview the set of Chapter 1 Class 12 Micro economics Important Questions given below.
Multiple choice and Very Short Answer Questions
1 Mark
Q1. Explain scarcity.
Ans. Scarcity refers to a lack of resources in comparison to the demand for them.
Q2. PPC displays an increase of resources in an economy by:
(a) A shift to the left
(b) A shift to the right
(c) No shift
- d) None of the above
Ans. (b) A shift to the right.
Q3. What does “resource economising” mean?
Ans. Making the most of the resources that are already available is called resource economising.
Q4. Define normative economics using an appropriate example.
Ans. Normative economics is a discipline of economics that examines how an economy should operate under ideal circumstances. It emphasises the aspect of “what ought to be.” For instance, farmers should receive subsidies, etc.
Short Answer Questions
3 or 4 marks
Q1. Discuss the issue – For whom to produce?
Ans. This issue concerns the people who ultimately consume the produced goods. Every economy has finite resources. Hence, no society can fully satisfy the needs of all of its members.
This creates a decision problem. The economic challenge of “For Whom to Produce?” is primarily concerned with the distribution mix of the final commodities and services produced.
Similar to how national income (or national product) is distributed among various production variables like land, labour, capital, and entrepreneurs, so is the distribution of final goods and services.
The problem can be divided into two categories:
- Personal distribution: This describes how the national revenue of an economy is divided up among various social classes.
- Functional Distribution: It determines the percentage of various production components in the nation’s total national product.
Q2. Describe opportunity cost using a numerical example.
Ans. Ans: Opportunity costs are the profits that an individual, investor, or company forgoes by selecting one option over another. The value (not a benefit) of the best alternative while making a choice is known as the opportunity cost, also known as alternative cost in microeconomic theory.
For example, Amrita has the option of three job offers. Jobs A pays Rs. 60,000, Job B pays Rs. 70,000, whereas Jobs C pays Rs. 70,000. The opportunity cost would be Rs. 70,000 per month if she accepted Job C.
Long Answer Questions
(6 Marks)
Q1. Describe the production capability frontier.
Ans. The curve representing all potential pairings of two items that can be produced in a given economy with a particular set of resources and technology is known as the production possibility frontier.
It is also known as the transformation curve or the production possibility curve.
Due to limited and scarce resources, it is only possible to expand the production of one good by decreasing the production of another. As a result, the PPC curve has a concave shape.
Assumptions
The following presumptions form the basis of the PP curve concept:
- The resource base of the economy is fixed.
- There is a sufficient level of pre-installed and unaltered technology in the economy.
- The available resources are efficient and are used entirely.
- Not all resources are equally efficient in the production of all commodities.
Diagram
In the diagram, there are various combinations of good X and good Y, specifically combinations A, B, C, and D, that could be produced when the resources in the economy are used as effectively and efficiently as possible. Any point on the production possibility frontier indicates a combination of items that could be created given the available resources and technological advancements. Any combination above the production possibility frontier indicates an improvement in technology or resources, while any combination below the PPC denotes inefficient or wasteful use of resources.
Reasons for Shifts in the Production Possibility Curve.
- Alterations in the available resources.
- Technology shifts in the production of both goods.
Rightward Movement
A shift in the curve to the right denotes an expansion of resources or a development in technology. For example, skilled labour, technological breakthroughs, and higher land productivity may increase production.
Leftward Movement
A shift in the curve to the left suggests a reduction in resources or a decline in technology in the economy. For example, unskilled labour, outdated technology, and lower land productivity are all issues that may cause productivity to decline.
Q2. Differentiate between planned and market economies.
Ans. The differences between planned and market economies are as follows:
| Basis | Planned Economy | Market Economy |
| Definition | It is the economy where the government sets the price and rules of buying and selling. | It is the place where buyers and sellers set the price and rule through the forces of demand and supply. |
| Government Regulation | It is a government-controlled economy. | Producers and consumers control it; there is little to no government regulation. |
| Objective | It concentrates on both macroeconomic and social objectives. | It concentrates on generating profits on a personal level. |
| Consumer Preference | In a planned economy, the government sets the product and the level of production, so consumer preferences are disregarded. | Consumers play a crucial role in determining the demand and price for goods and services. Therefore, consumer preferences are considered. |
| Innovation and Economic Development | It does not support growth and innovation. | It supports growth and innovation. |
| Business Ethics | In a planned economy, corporate operations are governed by the government. Unhealthy corporate practices and unemployment are reduced as a result. | It encourages unhealthy competition, which results in unethical corporate practises. Unemployment and inequality rise as a result. |
| Resources Distribution | Resource allocation is equitable in a planned economy. This reduces the disparity between the rich and the poor. | Resource allocation is inequitable in a free market economy. This increases the disparity between the rich and the poor. |
Conclusion
There is a fair balance of theoretical and numerical questions asked in the CBSE Class 12 board exams to test students’ understanding of the material. By solving the important questions, students will gain an understanding of the difficulty level of the questions. Extramarks’ Micro Economics Class 12 Chapter 1 Important Questions are sourced by subject matter experts after meticulously analysing CBSE paper patterns, exam trends, and the revised syllabus. All students need to do is access the link on the Extramarks website to review the Important Questions.
Q1-The sectors of the economy are:
opt–
a-Households, firms, government and external sector
b-Households, government and internal sector
c-Governments and firms
d-Government and external sector
ANS–Households, firms, government and external sector
Q2-What are the significant features of classical school of thought?
Opt–
ANS-Classical school of thought was the first school of economic thought that prevailed before 1930s.
It was based on the thought that supply creates its own demand and there is always a level of full employment in the economy.
Q3-What is the difference between the Macroeconomics & Microeconomics?
opt-
Macro Economics can be distinguished from Micro economics on following grounds:
|
DIFFERENCE |
ANS- Macro Economics can be distinguished from Micro economics on following grounds:
|
Q4-What do you mean by external sector?
ANS-
External sector refers to the external transactions of a country. If the countries sell goods internationally or to the rest of the world then it is called exports. If the economy purchases goods from the international market or from rest of the world then it is called imports. Capital can also flow in between different countries.
FAQs (Frequently Asked Questions)
1. What kind of economy does India have?
India has a mixed economy, which combines a market economy and a centrally controlled economy. In a mixed economy like India, both the market and the government make economic decisions. However, the role of the government in our nation is reducing over time. This is an exceptional characteristic of the Indian economy – the role of the government is decreasing while the market’s role is increasing. China, in contrast, has a government-planned economy.
2. What has discussed in Chapter 1 of Class 12 Microeconomics?
The following topics are discussed in Chapter 1 of Class 12 Microeconomics:
1.1 A simple economy
1.2 Central problems of an economy
1.3 Organisation of economic activities
1.4 Positive and normative economics
1.5 Microeconomics and macroeconomics
1.6 Plan of the book
3. How can students access supplementary reading materials in Economics for Part A: Introductory Microeconomics?
Students can access the supplementary reading material for Part A: Introductory Microeconomics from the link: https://cbseacademic.nic.in/web_material/doc/supmaterial/1_1_English_A.pdf
