Extra Question’s - Introduction and Central Problem of an Economy Notes | Study Crash Course of Micro Economics -Class 12 - Commerce

Commerce: Extra Question’s - Introduction and Central Problem of an Economy Notes | Study Crash Course of Micro Economics -Class 12 - Commerce

The document Extra Question’s - Introduction and Central Problem of an Economy Notes | Study Crash Course of Micro Economics -Class 12 - Commerce is a part of the Commerce Course Crash Course of Micro Economics -Class 12.
All you need of Commerce at this link: Commerce

EXTRA QUESTION’s

(Q1) Can non-attainable combinations ever be converted into attainable combinations?

Ans:  Yes. It can happen under two situations :

(i) when resources are increased, and

(ii) when technology improves.

(Q2) Does production take place only on PP curve?

(Q3) “Micro economics is the bottom-up view of the economy; macro economics is the       top-down view”. Explain how ?

(Q4) “Both micro-eonomics and macro-economics have same degree of aggregation.           Defend or refute 

(Q5) If more and more resources are constantly explored and new techniques are constantly discovered , don’t you think a day will come when our central problems will be solved once for all

(Q6) PPC is affected when resources are inefficiently employed in an economy.

(Q7) Why production possibility curve is termed as the production frontier of an economy ?
(Q8) What is the root cause of central problems ?

(Q9) Problem of unemployment, illiteracy etc. are studied under which branch of economics.

(Q10) Why is the problem of choice called “Central problem” ?

(Q11) How does PPC depict the basic problems of an economy ?

(Q12) If the marginal rate of transformation remains constant along the PPC, then what will be shape of PPC ?

(Q13) State the conditions in which the production possibility curve can rotate outwards.  

(Q14) Which branch of economics deals with the study of behaviour of Individual decision making units ?

(Q15) Can there be an economy without an economic problem ? Explain.

(Q16) Using a diagram, explain what will happen to the PPC of West Bengal, if there are widespread strikes and lockouts?

(Q17) ‘Economic problem is considered to be essentially a problem of choice.’ Do you agree?  Elucidate with an example.

(Q18) Why is production possibility curve called opportunity cost curve ?

(Q19) Apple Inc. plans to make huge FDI in Indian economy. How will it affect India’s GDP growth and overall PPC ?

(Q20) A shift from steam engines to electric engines increase carrying capacity of the Indian Railways both for the passenger traffic and the goods traffic. How would you reflect this change using the concept of PPF?

Ans: Increase in carrying capacity of the Indian Railways both for the passenger traffic and goods traffic implies an enhancement in its potential level of output because of better technology

(Q21) For those working under MGNREGA, the government has raised minimum from 100 to 150 days during an year.  How would it impact the actual and potential level of output in the economy?

Ans: Actual level of output would rise, because of a rise in employment.  Potential level of output would not rise and thus, PPC would not shift because, PPC is drawn on the assumption that the existing resources are fully employed.

(Q22) A labour intensive technique may be less efficient than a capital-intensive technique.  Still the use of the former is encouraged in a densely-populated country.  Why?

Ans: It enables producers to increase the supply.  Price of the commodity falls.  Demand expands.  More production is stimulated.  More employment promotes human well-being.

(Q23) What is the opportunity cost of opting for a higher studies instead of doing a job?

Ans: Opportunity cost in that case will be his salary that the person would have earned in doing the job.

(Q24)“ Only scarce goods attract price ”  Comment.

Ans: It is a factual and correct statement.  Goods which are freely available and do not attract price like natural air are called non-economic goods.  On the contrary, goods which are scarce and whose availability (supply) is limited in relation to demand for them attract price in the market.  Such goods are called economic goods such as clothes, pen, shoes, petrol, etc.

(Q26)  Why is microeconomics called price theory ?

Ans: The subject matter of microeconomics is the determination of relative prices of various goods and services.  So it is called price theory.

(Q27) Why is macroeconomics called income theory ?

Ans: The subject matter of macroeconomics is the determination of national income.  So it is called income theory.

(Q28) What is the opportunity cost of a factor which has no alternative use?

Ans: Opportunity cost of such a factor is zero.

(Q29)  What will be the effect of ‘demonetization’ announced by the government of India on the PPC of India?  Give your reason.

Ans: Demonetization refers to the situation whereby the government of a country bans the old currency, i.e., it ceases to be a legal tender.  As a result, black money with the people is no longer usable.  However, there won’t be any reduction in the financial resources because equivalent new currency is issued by RBI. Thus, in the short period, till the new currency is infused in the economy, due to cash crunch in the industry, the economy will function as a level below the PPC.  But due to promotion of cashless economy, growth in technology, and promotion of cashless economy, growth in technology, and better allocation of resources, PPC may tend to shift rightwards in the long run.  Diagrammatically.

(i)    In short run, economy will operate at point A.

(ii)    In long run, PPC may shift to PPC1.

(Q30) Union Health Minister of India has recently launched ‘Mission Indradhanush’:  Full Immunization for All Children by 2020.  State its impact on production possibility curve of the economy.

Ans: Immunization for all children would ensure the emergence of robust labour force in the country.  When the robust labour force is added to the existing stock of manpower, resource-pool of the country is expected to rise.  Accordingly, PPC is expected to shift to the right.

(Q31) What is the likely impact of import substitution policy on the PPC relating to domestic production?  Illustrate diagrammatically.

Ans: Import substitution means producing goods in the domestic economy which are being imported from rest of the world.  Assuming that now inputs are imported in place of final goods, resource-pool of the domestic economy would rise.  Accordingly, PPC would shift to the right

(Q32) Indian economy has total power generation of 50,000 Mega Watts, yet it needs power to the extent of 60,000 Mega Watts. What type of problem it is ?

Ans: It is an ‘economic problem’ related to the problem of scarcity.

(Q33) Does production possibility frontier indicate the actual level of output or potential level of output?

Ans: Production possibility frontier indicates potential level of output. However, if resources are utilised fully as well as efficiently, the actual level of output coincides with the potential level of output.

(Q34) A country is producing two goods good X (labour intensive) and good Y (capital intensive). What will be the impact on the Production Possibility Curve (PPC), if there is huge migration of labour to the home country from the neighbouring countries

(Q35) China keeps on inventing new and further advanced technologies. Do you agree that if they keep on doing so, one day will come when there will be no central economic problems in China?

(Q36) An Economy is operating on PPC.  Is there any method to increase the agricultural production as the land is fully utilized.
Ans: Yes, agricultural production can be increased by changing the technology. Advancement in technology will shift PPC rightwards which in turn would increase agricultural production.

(Q37) The efficient use of resources is more important and crucial in a developing country like India as compared to developed countries ? Do you agree ?

Ans: Yes, I agree with the given statement. India is on the developmental path and it needs more resources as compared to developed countries. With the constraint of limited resources, the only option left with Indian economy is to make efficient and optimum use of available resources.

(Q38) Seema is a post-graduate from Delhi University. She had the following options to earn her livelihood :
(i) To earn Rs. 25,000 from teaching in a school; or 

(ii) To earn Rs. 30,000 by providing private tutions. Which option is better in terms of moral values ?

Ans: “Teaching in a school” is a better option in terms of moral values as it provides maximum “Social Welfare”.

(Q39) Children are the future policy makers of our country. However, many of the poor children are ill-treated and are forced to work at a tender age. Discuss the steps that need to be taken to reduce child labour ?

Ans: The following steps can be taken to reduce child labour :

(i) Government should take serious steps against employers who hire child labour.

(ii) Government should make education compulsory and accessible to the poorest of the poor.

(Q40) One of the central problems of an economy is “How to Produce”. The planners of Indian Economy are stressing on using labour intensive techniques for production of goods and services. Do you justify this on the grounds of moral responsibility ?

Ans: Yes, I agree with the Indian planners. India is facing a severe problem of unemployment  and promoting employment generating opportunities is of utmost importance. Use of labour intensive techniques will reduce the problem of unemployment and will also help in fighting with the problem of poverty.

The document Extra Question’s - Introduction and Central Problem of an Economy Notes | Study Crash Course of Micro Economics -Class 12 - Commerce is a part of the Commerce Course Crash Course of Micro Economics -Class 12.
All you need of Commerce at this link: Commerce

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