All questions of Introduction for Commerce Exam

An economy does not always on a ppc . when an economy produces on ppc it mean there is no unemployment and all the resources are fully and being used efficiently but practically these 2 conditions may not apply . if there is unemployment or inefficent use of resources an ecnmy will opreate inside the ppc therefor the above given statement is refuted .

It see the truth what they are

I. The term Micro Economics is derived from the Greek work “Mikros” which means “Small”. Micro economics gives a detailed analysis of one part of the economy or society. It studies the behaviour of individual units of the economy, such as households, firms, industries and markets.ii. Micro economics is concerned with the study of behaviour of individual element(s) of an economy, whereas, macro economies concerned with the study of behaviours of an economy as whole.iii. Micro-economics gives a microscopic picture of the economy. The activities of numerous economic units and their inter-relationship are studied and analysed minutely through this method.

Economics is scracity because they have alternative uses... It is the important characteristics of economy

Positive economics is objective and fact based, while normative economics is subjective and value based. Positive economic statements must be able to be tested and proved or disproved. Normative economic statements are opinion based, so they cannot be proved or disproved.

P.P.C. is concave to the origin due to increase in marginal rate of transformation.

True

Normative economics. Normative economics (as opposed to positive economics) is a part of economics that expresses value or normative judgments about economic fairness or what the outcome of the economy or goals of public policy ought to be.

Price of a commodity is decided by demand and supply for it in the economy and aggregate demand supply are macro variables

Bcoz macro. studies the economy as a whole.ex:- aggregate demand,aggregate supply.jute industry is a part of micro.

**Explanation:**

Opportunity cost is the value of the next best alternative that is forgone when a choice is made. It is the cost of not choosing the next best alternative. In other words, it is the value of the best option that is sacrificed in order to choose a different option.

Here is a detailed explanation of why option 'D' is the correct answer:

**Next best alternative foregone:**
Opportunity cost refers to the value of the next best alternative that is foregone when a decision is made. When resources are limited, choosing to allocate them towards one option means sacrificing the benefits that could have been gained from the next best alternative. This is the essence of opportunity cost.

**Example:**
For example, suppose a person has the option to either start a business or go to college. If they choose to start a business, the opportunity cost would be the benefits that could have been gained from going to college. Conversely, if they choose to go to college, the opportunity cost would be the potential benefits of starting a business.

**Comparison with other options:**
Options A, B, and C are not the correct answers because they do not fully capture the concept of opportunity cost. While option A suggests that opportunity cost refers to the money value of an opportunity in producing a good, opportunity cost is not limited to just the money value. It also encompasses the value of the alternative uses of resources.

Option B refers to the cost of a resource used in production which is not necessarily the same as opportunity cost. While the cost of a resource is certainly a factor to consider when calculating opportunity cost, it is not the only factor. Opportunity cost takes into account the value of the next best alternative.

Option C suggests that opportunity cost is the best alternative use of a resource. While this is partly true, it does not fully capture the idea that opportunity cost is the value of the best option that is forgone when a different option is chosen.

Therefore, option 'D' is the correct answer as it best captures the concept of opportunity cost by stating that it is the next best alternative foregone.

Yeah its planning authority or government of ones country that takes all the major decisions regarding economy

The inability of a society to allocate resources efficiently?

D.
coz allocation of resources means making optimum utilisation of resources... i.e. resources are fully utilized only when they are used production purpose.. without d wastes of resources.

Market Economy

A market economy is an economic system in which the decisions regarding production, distribution, and resource allocation are primarily determined by the interactions of consumers and producers in the market. In this type of economy, consumers and producers make choices based on the market forces of supply and demand.

Key features of a market economy
- Private ownership: In a market economy, most resources and means of production are owned by individuals or private entities rather than the government.
- Free market: The market operates without significant government intervention or control. Prices of goods and services are determined by supply and demand.
- Competition: Market economies foster competition among producers, leading to innovation, efficiency, and better products and services.
- Profit motive: Producers are motivated by the desire to maximize profits, which incentivizes them to respond to consumer demand and produce goods and services efficiently.

Market forces of supply and demand
In a market economy, the interaction of supply and demand plays a crucial role in determining prices and quantities of goods and services. The law of supply states that as the price of a product or service increases, the quantity supplied also increases. Conversely, as the price decreases, the quantity supplied decreases.

Similarly, the law of demand states that as the price of a product or service increases, the quantity demanded decreases. Conversely, as the price decreases, the quantity demanded increases. The equilibrium price and quantity are determined at the point where the supply and demand curves intersect.

Consumer and producer choices
In a market economy, consumers and producers make choices based on their own self-interests and the forces of supply and demand. Consumers make decisions about what goods and services to purchase based on their preferences, needs, and available income. They consider the price, quality, and availability of different products in the market.

Producers, on the other hand, make choices about what goods and services to produce based on the expected demand and profitability. They consider factors such as production costs, market demand, competition, and potential profits. If a particular product or service is in high demand, producers are likely to allocate more resources towards its production.

Conclusion
In summary, a market economy is characterized by the decisions made by consumers and producers based on the market forces of supply and demand. Consumers determine the demand for goods and services, while producers respond to this demand by allocating resources and engaging in production. The interaction of supply and demand ultimately determines the prices and quantities of goods and services in the market.

Labour intensive techniques are those production techniques that require a significant amount of labor input compared to other factors of production such as capital or technology. These techniques are typically characterized by a high ratio of labor to capital.

In a labor surplus economy, there is an excess supply of labor relative to the demand for labor. This means that there are more workers available than there are jobs available. In such an economy, labor is usually abundant and cheap. As a result, firms tend to favor labor-intensive techniques of production to take advantage of the low labor costs. This is because using labor-intensive techniques allows firms to employ a larger number of workers at a lower cost, thus maximizing their output and profits.

In a labor surplus economy, the following factors contribute to the preference for labor-intensive techniques:

1. Cheap labor: With a surplus of labor, the wages of workers are typically low. This makes labor a relatively cheap factor of production compared to capital. By employing more workers, firms can take advantage of the low labor costs and increase their production levels.

2. Limited access to capital: In economies with a labor surplus, there is often limited access to capital due to the low level of investment and financial resources. As a result, firms may not have the necessary capital to invest in advanced technology or machinery. Labor-intensive techniques, which require less capital investment, are therefore more feasible in such economies.

3. Low productivity levels: In labor surplus economies, the level of education and skill development among the workforce may be relatively low. This can result in lower productivity levels compared to developed economies. Using labor-intensive techniques allows firms to make the most of the available labor resources, even with lower productivity levels.

It is important to note that the preference for labor-intensive techniques in a labor surplus economy is a result of the specific economic conditions prevailing in such an economy. In economies with a labor shortage or higher levels of capital, firms may choose to adopt capital-intensive techniques that rely more on advanced technology and machinery.

Understanding the Assertion and Reason
The Assertion (A) states that in a market economy, prices act as signals for both producers and consumers regarding the scarcity of goods and services. This is a fundamental principle of economics, where price changes indicate supply and demand dynamics, guiding decision-making.
The Reason (R) explains that in a centrally planned economy, the government sets prices based on production schedules. This reflects a different economic system where the market forces of supply and demand do not dictate prices.
Analysis of Assertion and Reason
- Both True:
- The Assertion is true because prices indeed signal scarcity. When a good is scarce, its price rises, signaling producers to increase supply and consumers to reduce demand.
- The Reason is also true. In centrally planned economies, the government controls price setting, disconnecting it from market signals.
- Not Directly Related:
- The Reason does not explain the Assertion. The role of prices in a market economy is based on free market principles, which are absent in centrally planned economies. Thus, while both statements are accurate, they do not provide a causal link.
Conclusion
Given this analysis, the correct answer is option 'B': Both Assertion and Reason are true, but the Reason is not the correct explanation of the Assertion. Understanding this distinction is crucial for grasping the differences between market and centrally planned economies.

Opportunity Cost of a Good

The opportunity cost of a good refers to the potential benefit or value that is given up when an individual or society chooses to allocate resources towards the production or consumption of that good. It is the cost of forgoing the next best alternative. In other words, it is the value of the next best alternative that could have been chosen instead.

Explanation

1. Quantity of other goods sacrificed
- The opportunity cost of a good is the quantity of other goods that must be sacrificed or foregone in order to obtain another unit of that particular good.
- For example, if a person chooses to spend their money on buying a new car, the opportunity cost would be the other goods or services that could have been purchased with that money, such as a vacation or home improvements.

2. Time lost in finding it
- The time lost in finding a good is not necessarily the opportunity cost of that good.
- While time is a valuable resource, it is not directly related to the opportunity cost of a good.
- Opportunity cost is focused on the trade-off between different goods or alternatives, rather than the time spent in obtaining them.

3. Expenditure on the good
- The expenditure on a good is not the opportunity cost of that good.
- Expenditure simply represents the monetary value or price paid for a good.
- Opportunity cost, on the other hand, involves considering the value of the next best alternative that could have been chosen instead.

4. Loss of interest in using savings
- The loss of interest in using savings is not the opportunity cost of a good.
- While there may be an opportunity cost associated with using savings (such as the potential interest earnings from investing those savings), this is not the primary consideration when determining the opportunity cost of a specific good.

Therefore, the correct answer is option 'A': the quantity of other goods sacrificed to get another unit of that good. Opportunity cost is fundamentally about the trade-offs and sacrifices made when choosing one option over another, specifically in terms of the quantity of other goods or alternatives that must be given up.