NCERT Solutions - Introduction to Micro Economics Commerce Notes | EduRev

Economics Class 11

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 Page 1


NCERT Solutions for Class 12th 
Microeconomics Chapter Chapter 1 – 
Introduction 
National Council of Educational Research and Training (NCERT) Book Solutions for 
class 12th 
Subject: Economics 
Chapter: Chapter 1 – Introduction 
These Class 12th NCERT Solutions for Economics provide detailed, step-by-step 
solutions to all questions in an Economics NCERT textbook. 
Click Here for Class 12 Economics Notes. 
Class 12th Economics Chapter 1 – Introduction NCERT Solution is given below. 
Question 1. Discuss the central problems of an economy. 
Answer We know that resources are limited In relation to the unlimited wants, it is 
important to economise their use and utilise them in the most 
efficient manner. 
It leads to following central problems, that are faced by every economy. 
(i) What to Produce? 
There is limited resources and thus producers can not produce all the goods, in an 
economy. 
So, every economy has this problem thai what to produce and in what quantities. It has 
two dimensions 
(a) Kinds of goods to be produced 
Page 2


NCERT Solutions for Class 12th 
Microeconomics Chapter Chapter 1 – 
Introduction 
National Council of Educational Research and Training (NCERT) Book Solutions for 
class 12th 
Subject: Economics 
Chapter: Chapter 1 – Introduction 
These Class 12th NCERT Solutions for Economics provide detailed, step-by-step 
solutions to all questions in an Economics NCERT textbook. 
Click Here for Class 12 Economics Notes. 
Class 12th Economics Chapter 1 – Introduction NCERT Solution is given below. 
Question 1. Discuss the central problems of an economy. 
Answer We know that resources are limited In relation to the unlimited wants, it is 
important to economise their use and utilise them in the most 
efficient manner. 
It leads to following central problems, that are faced by every economy. 
(i) What to Produce? 
There is limited resources and thus producers can not produce all the goods, in an 
economy. 
So, every economy has this problem thai what to produce and in what quantities. It has 
two dimensions 
(a) Kinds of goods to be produced 
(b) Quantity of goods to be produced. 
(ii) How to Produce? 
This problem refers to the selection of technique to be used for production of goods and 
services 
There are various techniques available to produce goods 
(a) Labour Intensive Techniques 
(b) Capital Intensive Techniques 
Thus. it is difficult to allocate the resources efficiently and effectively. 
(iii) For Whom to Produce? 
Due to lack of resources in every economy, can not satisfy all the wants of its people. 
So, there is problem to select the category of people who consume the goods. Whether 
to produce goods for rich section or poor section of society or more for rich and less for 
poor section. 
Thus, every economy faces the problem of allocating the scarce resource to the 
production of different possible goods and services and distribution of 
these among the individuals with in the economy. The allocation of scarce resources 
and the distribution of the final goods and services are the 
central problem of any economy 
Question 2. What do you mean by the production possibilities of an economy? 
Answer We have scarce resources and there is a problem exist what to produce and in 
what quantity. Thus, we are taking the help from the 
production possibility curve. It tells us how we can combine two goods the can be 
produced with the given resources on the assumptions 
(a) resources are fully and efficiently utilised and (b) technique of production remains 
Page 3


NCERT Solutions for Class 12th 
Microeconomics Chapter Chapter 1 – 
Introduction 
National Council of Educational Research and Training (NCERT) Book Solutions for 
class 12th 
Subject: Economics 
Chapter: Chapter 1 – Introduction 
These Class 12th NCERT Solutions for Economics provide detailed, step-by-step 
solutions to all questions in an Economics NCERT textbook. 
Click Here for Class 12 Economics Notes. 
Class 12th Economics Chapter 1 – Introduction NCERT Solution is given below. 
Question 1. Discuss the central problems of an economy. 
Answer We know that resources are limited In relation to the unlimited wants, it is 
important to economise their use and utilise them in the most 
efficient manner. 
It leads to following central problems, that are faced by every economy. 
(i) What to Produce? 
There is limited resources and thus producers can not produce all the goods, in an 
economy. 
So, every economy has this problem thai what to produce and in what quantities. It has 
two dimensions 
(a) Kinds of goods to be produced 
(b) Quantity of goods to be produced. 
(ii) How to Produce? 
This problem refers to the selection of technique to be used for production of goods and 
services 
There are various techniques available to produce goods 
(a) Labour Intensive Techniques 
(b) Capital Intensive Techniques 
Thus. it is difficult to allocate the resources efficiently and effectively. 
(iii) For Whom to Produce? 
Due to lack of resources in every economy, can not satisfy all the wants of its people. 
So, there is problem to select the category of people who consume the goods. Whether 
to produce goods for rich section or poor section of society or more for rich and less for 
poor section. 
Thus, every economy faces the problem of allocating the scarce resource to the 
production of different possible goods and services and distribution of 
these among the individuals with in the economy. The allocation of scarce resources 
and the distribution of the final goods and services are the 
central problem of any economy 
Question 2. What do you mean by the production possibilities of an economy? 
Answer We have scarce resources and there is a problem exist what to produce and in 
what quantity. Thus, we are taking the help from the 
production possibility curve. It tells us how we can combine two goods the can be 
produced with the given resources on the assumptions 
(a) resources are fully and efficiently utilised and (b) technique of production remains 
constant or we can say produced possibility impllies 
the possible situation to produce two goods with given resources an technology. 
Question 3. What is a production possibility frontier? 
Answer It refers to a graphical representation of all the possible combinations of two 
products that can be produced with the given resources and technology 
 
Question 4. Discuss the subject matter of economics. 
Answer Traditionally, the subject matter of economics has been studied under two 
branches i. e., 
(i) Micro Economics It IS that branch of economics, which studies the problems of an 
individual unit of an economy. Its main tools are demand and supply e.g, Individual 
income, Individual expenditure. 
(ii) Macro Economics It is that branch of economics. which studies the economic 
problems at the level of an economy as a whole. It is concerned with determination of 
aggregate output and general price  level in the economy as a whole. Its main tools are 
aggregate demand and aggregate supply. 
Question 5. Distinguish between a centrally planned economy and a market economy. 
Answer Difference between Centrally Planned Economy and Market Economy 
Page 4


NCERT Solutions for Class 12th 
Microeconomics Chapter Chapter 1 – 
Introduction 
National Council of Educational Research and Training (NCERT) Book Solutions for 
class 12th 
Subject: Economics 
Chapter: Chapter 1 – Introduction 
These Class 12th NCERT Solutions for Economics provide detailed, step-by-step 
solutions to all questions in an Economics NCERT textbook. 
Click Here for Class 12 Economics Notes. 
Class 12th Economics Chapter 1 – Introduction NCERT Solution is given below. 
Question 1. Discuss the central problems of an economy. 
Answer We know that resources are limited In relation to the unlimited wants, it is 
important to economise their use and utilise them in the most 
efficient manner. 
It leads to following central problems, that are faced by every economy. 
(i) What to Produce? 
There is limited resources and thus producers can not produce all the goods, in an 
economy. 
So, every economy has this problem thai what to produce and in what quantities. It has 
two dimensions 
(a) Kinds of goods to be produced 
(b) Quantity of goods to be produced. 
(ii) How to Produce? 
This problem refers to the selection of technique to be used for production of goods and 
services 
There are various techniques available to produce goods 
(a) Labour Intensive Techniques 
(b) Capital Intensive Techniques 
Thus. it is difficult to allocate the resources efficiently and effectively. 
(iii) For Whom to Produce? 
Due to lack of resources in every economy, can not satisfy all the wants of its people. 
So, there is problem to select the category of people who consume the goods. Whether 
to produce goods for rich section or poor section of society or more for rich and less for 
poor section. 
Thus, every economy faces the problem of allocating the scarce resource to the 
production of different possible goods and services and distribution of 
these among the individuals with in the economy. The allocation of scarce resources 
and the distribution of the final goods and services are the 
central problem of any economy 
Question 2. What do you mean by the production possibilities of an economy? 
Answer We have scarce resources and there is a problem exist what to produce and in 
what quantity. Thus, we are taking the help from the 
production possibility curve. It tells us how we can combine two goods the can be 
produced with the given resources on the assumptions 
(a) resources are fully and efficiently utilised and (b) technique of production remains 
constant or we can say produced possibility impllies 
the possible situation to produce two goods with given resources an technology. 
Question 3. What is a production possibility frontier? 
Answer It refers to a graphical representation of all the possible combinations of two 
products that can be produced with the given resources and technology 
 
Question 4. Discuss the subject matter of economics. 
Answer Traditionally, the subject matter of economics has been studied under two 
branches i. e., 
(i) Micro Economics It IS that branch of economics, which studies the problems of an 
individual unit of an economy. Its main tools are demand and supply e.g, Individual 
income, Individual expenditure. 
(ii) Macro Economics It is that branch of economics. which studies the economic 
problems at the level of an economy as a whole. It is concerned with determination of 
aggregate output and general price  level in the economy as a whole. Its main tools are 
aggregate demand and aggregate supply. 
Question 5. Distinguish between a centrally planned economy and a market economy. 
Answer Difference between Centrally Planned Economy and Market Economy 
 S. 
No. 
Centrally Planned Economy Market Economy 
1. It owned controlled and operated by the government 
It owned controlled and operated by the priva
sector. 
2. 
All the means of production are owned by the 
government in case of centrally planned economy. 
All resources of production (land, labour , 
capital and enterprise) are private property . 
3. Government plays the complete role. Government does not play any role. 
4. 
The central palnning authority decides what, how 
and for whom to produce. 
The decision of what , how and for whom to 
produce through price mechanism. 
Question 6. What do you understand by positive economic analysis? 
Answer Positive economic analysis is confined to cause and effect relationship. In other 
words, it states “what is.” It relates to what the facts are, were or will be about various 
economic phenomena in the economics. e.q., it deals with the analysis of questions like 
what are the causes of unemployment. 
Question 7. What do you understand by normative economic analysis? 
Page 5


NCERT Solutions for Class 12th 
Microeconomics Chapter Chapter 1 – 
Introduction 
National Council of Educational Research and Training (NCERT) Book Solutions for 
class 12th 
Subject: Economics 
Chapter: Chapter 1 – Introduction 
These Class 12th NCERT Solutions for Economics provide detailed, step-by-step 
solutions to all questions in an Economics NCERT textbook. 
Click Here for Class 12 Economics Notes. 
Class 12th Economics Chapter 1 – Introduction NCERT Solution is given below. 
Question 1. Discuss the central problems of an economy. 
Answer We know that resources are limited In relation to the unlimited wants, it is 
important to economise their use and utilise them in the most 
efficient manner. 
It leads to following central problems, that are faced by every economy. 
(i) What to Produce? 
There is limited resources and thus producers can not produce all the goods, in an 
economy. 
So, every economy has this problem thai what to produce and in what quantities. It has 
two dimensions 
(a) Kinds of goods to be produced 
(b) Quantity of goods to be produced. 
(ii) How to Produce? 
This problem refers to the selection of technique to be used for production of goods and 
services 
There are various techniques available to produce goods 
(a) Labour Intensive Techniques 
(b) Capital Intensive Techniques 
Thus. it is difficult to allocate the resources efficiently and effectively. 
(iii) For Whom to Produce? 
Due to lack of resources in every economy, can not satisfy all the wants of its people. 
So, there is problem to select the category of people who consume the goods. Whether 
to produce goods for rich section or poor section of society or more for rich and less for 
poor section. 
Thus, every economy faces the problem of allocating the scarce resource to the 
production of different possible goods and services and distribution of 
these among the individuals with in the economy. The allocation of scarce resources 
and the distribution of the final goods and services are the 
central problem of any economy 
Question 2. What do you mean by the production possibilities of an economy? 
Answer We have scarce resources and there is a problem exist what to produce and in 
what quantity. Thus, we are taking the help from the 
production possibility curve. It tells us how we can combine two goods the can be 
produced with the given resources on the assumptions 
(a) resources are fully and efficiently utilised and (b) technique of production remains 
constant or we can say produced possibility impllies 
the possible situation to produce two goods with given resources an technology. 
Question 3. What is a production possibility frontier? 
Answer It refers to a graphical representation of all the possible combinations of two 
products that can be produced with the given resources and technology 
 
Question 4. Discuss the subject matter of economics. 
Answer Traditionally, the subject matter of economics has been studied under two 
branches i. e., 
(i) Micro Economics It IS that branch of economics, which studies the problems of an 
individual unit of an economy. Its main tools are demand and supply e.g, Individual 
income, Individual expenditure. 
(ii) Macro Economics It is that branch of economics. which studies the economic 
problems at the level of an economy as a whole. It is concerned with determination of 
aggregate output and general price  level in the economy as a whole. Its main tools are 
aggregate demand and aggregate supply. 
Question 5. Distinguish between a centrally planned economy and a market economy. 
Answer Difference between Centrally Planned Economy and Market Economy 
 S. 
No. 
Centrally Planned Economy Market Economy 
1. It owned controlled and operated by the government 
It owned controlled and operated by the priva
sector. 
2. 
All the means of production are owned by the 
government in case of centrally planned economy. 
All resources of production (land, labour , 
capital and enterprise) are private property . 
3. Government plays the complete role. Government does not play any role. 
4. 
The central palnning authority decides what, how 
and for whom to produce. 
The decision of what , how and for whom to 
produce through price mechanism. 
Question 6. What do you understand by positive economic analysis? 
Answer Positive economic analysis is confined to cause and effect relationship. In other 
words, it states “what is.” It relates to what the facts are, were or will be about various 
economic phenomena in the economics. e.q., it deals with the analysis of questions like 
what are the causes of unemployment. 
Question 7. What do you understand by normative economic analysis? 
Answer Normative economic analysis is concerned with what ‘ought to be’. It examines 
the real economic events from moral and ethical angles and judge whether certain 
economic events are desirable or undesirables. e.g., it deals with the analysis of 
questions like what should be the prices of food grains. 
Question 8. Distinguish between Microeconomics and Macroeconomics. 
Answer Difference between Microeconomics and Macroeconomics 
 
Microeconomics Macroeconomics 
Meaning 
It is that part of economics, which studies 
the economic problems of individual unit 
It is that part of economics, which studies the 
economic problems of aggregate level 
Objective 
Its aim is determine the commodity price 
or factors of production for an individual 
firm 
its aim is to determine national income 
,employment growth of nation  in the economy
as a whole. 
Tools its main tools are demand and supply 
its main tools are aggregate demand and 
aggregate supply 
Level of 
it involves limited degree of aggregation it involves highest level of aggregation 
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