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Class 11 Economics Short Questions With Answers (Part - 1) - Introduction to Micro Economics

Q.1. Explain how scarcity and choice go together.

Class 11 Economics Short Questions With Answers (Part - 1) - Introduction to Micro Economics

Fig: Human wants are unlimited but resources are scarce

Ans. 

  • Scarcity and choice are fundamentally related because they are driving forces behind many economic human behaviours. 
  • Resources are limited and people are required to make choice among various alternative uses of resources. 
  • Every man on the Earth faces the problem of scarcity and choice. Even the richest person in the world has to face the problem of scarcity, in terms of time. 
  • Thus, it is true that scarcity and choice go together.

Q.2. What gives rise to an economic problem?

Ans

  • Scarcity of Resources: Limited availability of resources relative to unlimited wants and needs.
  • Unlimited Wants and Needs: Human desires for goods and services are virtually limitless.
  • Alternative Uses of Resources: Resources can be used in different ways, leading to opportunity costs and trade-offs.
  • Competition for Resources: Individuals, firms, and governments compete for scarce resources in the market.
  • Limited Time Horizon: Decisions about resource allocation must be made within a finite time frame.
  • Environmental Constraints: Environmental factors impose limits on resource availability and usage, influencing allocation decisions.

Q.3. What is meant by economic problem?

Ans. 

  • The economic problem arises from the scarcity of resources relative to unlimited wants and needs.
  • It involves making choices about how to allocate limited resources efficiently among competing uses.
  • The fundamental challenge is to satisfy endless desires for goods and services with finite resources.
  • This requires prioritizing among alternative uses of scarce resources and considering opportunity costs.
  • The economic problem is central to understanding resource allocation, production, consumption, and distribution in economies.

Q.4. Why does an economic problem arise?  

Ans.

  • Scarcity of Resources: Resources are limited compared to the unlimited wants and needs of individuals and society, necessitating efficient resource allocation.

  • Unlimited Wants and Needs: Human desires for goods and services are limitless, driving an ever-expanding list of wants and needs.

  • Alternative Uses of Resources: Resources can be used in different ways, leading to opportunity costs and trade-offs in resource allocation decisions.

  • Competition for Resources: In market economies, individuals, firms, and governments compete for scarce resources, sometimes resulting in conflicts over distribution.

  • Limited Time Horizon: Time is finite, requiring decisions about resource allocation within a specific time frame, influencing consumption, investment, and production choices.

  • Environmental Constraints: Environmental factors limit resource availability and usage, raising concerns about sustainability and impacting economic decisions.

Q.5. Why is economic problem regarded as a problem of choice?

Ans. 

  • Scarcity necessitates choice: Limited resources relative to unlimited wants require decisions on resource allocation.

  • Opportunity cost: Choices involve trade-offs, with the value of the next best alternative forgone.

  • Trade-offs: Decision-making requires prioritizing among alternatives, considering benefits and costs.

  • Decision-making process: Continuous evaluation of options based on preferences and priorities.

  • Limited resources, unlimited wants: Inability to satisfy all desires necessitates choosing which to fulfill and which to forgo.

Q.6. Why do problems related to allocation of resources in an economy arise? Explain.

Ans. 

  • Scarcity: Limited resources compared to unlimited wants necessitate efficient resource allocation.

  • Competition: Individuals, firms, and governments compete for scarce resources, leading to allocation challenges.

  • Diverse Needs: Various sectors and individuals have different needs, requiring prioritization in resource allocation.

  • Changing Demands: Dynamic economic conditions and evolving consumer preferences necessitate adjustments in resource allocation over time.

  • External Factors: Environmental constraints and global events can disrupt resource availability and distribution, posing additional challenges in allocation.


Q.7. What are the main tools of economic analysis?

Ans. 

  • Mathematical Models: Using mathematical equations to represent economic relationships and analyze data.

  • Graphical Analysis: Visual representation of economic concepts using graphs such as supply and demand curves.

  • Statistical Methods: Analyzing economic data using statistical techniques to identify patterns and trends.

  • Optimization Techniques: Maximizing or minimizing economic objectives subject to constraints using optimization methods.

  • Econometric Models: Statistical models that combine economic theory and empirical data to estimate relationships and make predictions.

Q.8. What is positive economics?

Ans. 

  • Description: Positive economics involves describing and explaining economic phenomena based on facts and data.

  • Objective Analysis: It focuses on what is and seeks to understand economic behavior without making value judgments.

  • Empirical Testing: Positive economics relies on empirical evidence and observation to test economic theories and hypotheses.

  • Predictive Power: Its goal is to make accurate predictions about economic outcomes based on observable data and analysis.

Q.9. What is normative economics?  

Ans. 

  • Prescription: Normative economics involves making value judgments and recommending what ought to be done in the economy.

  • Subjective Analysis: It includes opinions, ideologies, and moral principles in evaluating economic policies and outcomes.

  • Policy Recommendations: Normative economics aims to provide guidance on how resources should be allocated and how economic issues should be addressed.

  • Value-Based: Normative statements are based on subjective beliefs about fairness, equity, and social welfare rather than purely objective analysis.

Q.10. What is a market economy?  

Ans. 

  • Decentralized Allocation: A market economy is characterized by decentralized decision-making, where resources are allocated through the interaction of supply and demand in markets.

  • Private Ownership: Most resources, such as land, labor, and capital, are owned and controlled by individuals and businesses rather than the government.

  • Profit Motive: Participants in a market economy are driven by the pursuit of profit, which serves as a key incentive for production and innovation.

  • Limited Government Intervention: Government intervention in a market economy is typically minimal, with regulations focused on ensuring fair competition and protecting property rights.

  • Price Mechanism: Prices play a crucial role in coordinating economic activities, signaling information about scarcity and guiding resource allocation decisions.

Class 11 Economics Short Questions With Answers (Part - 1) - Introduction to Micro Economics

The document Class 11 Economics Short Questions With Answers (Part - 1) - Introduction to Micro Economics is a part of the Commerce Course Economics Class 11.
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FAQs on Class 11 Economics Short Questions With Answers (Part - 1) - Introduction to Micro Economics

1. What is microeconomics?
Microeconomics is a branch of economics that focuses on the behavior of individual consumers, households, and firms, and how their decisions affect the allocation of limited resources. It analyzes how supply and demand determine prices, how individuals make decisions regarding consumption and production, and how markets function.
2. What are the key concepts in microeconomics?
Some key concepts in microeconomics include supply and demand, opportunity cost, elasticity, production, costs of production, market structures, consumer behavior, and factors of production (land, labor, capital, and entrepreneurship). These concepts help economists understand how individuals and firms make decisions and how markets operate.
3. How does microeconomics differ from macroeconomics?
Microeconomics focuses on individual economic agents, such as consumers and firms, and their interactions in specific markets. It examines how prices are determined and how individual decisions impact the economy. On the other hand, macroeconomics studies the economy as a whole, including variables like inflation, unemployment, and economic growth. It looks at the broader picture and analyzes aggregate economic behavior.
4. Why is microeconomics important?
Microeconomics is important because it helps us understand how individuals and businesses make decisions in a world with limited resources. It provides insights into how markets function, how prices are determined, and how government policies can impact economic outcomes. Microeconomics also helps in making informed decisions regarding consumption, production, and investment.
5. How does microeconomics relate to everyday life?
Microeconomics relates to everyday life in various ways. It helps us understand why prices of goods and services fluctuate, how individuals make decisions regarding their purchases, and how businesses determine their production levels. It also helps us analyze factors like income distribution, taxation, and the impact of government policies on individuals and businesses. By understanding microeconomics, we can make better choices as consumers and comprehend the economic forces that shape our daily lives.
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