Passage Based Questions: Introduction to Microeconomics | Economics Class 11 - Commerce PDF Download

Passage - 1

Direction: Read the following Passage and Answer the Questions.

Every society must decide on how much of each of the many possible goods and services it will produce. Whether to produce more of food, clothing, housing or to have more of luxury goods. Whether to have more agricultural goods or to have industrial products and services. Whether to use more resources in education and health or to use more resources in building military services. Whether to have more of basic education or more of higher education. Whether to have more of consumption goods or to have investment goods (like machine) which will boost production and consumption tomorrow.

Q1: What fundamental choices must every society make when it comes to allocating resources and producing goods and services, as highlighted in the passage?
Ans:

• Every society must make decisions about the allocation of resources, including choices related to food, clothing, housing, luxury goods, agriculture, industry, education, health, military services, basic education, higher education, consumption goods, and investment goods.

Q2: Why is the allocation of resources and production decisions crucial for a society, and how do they impact a nation's well-being and development?
Ans:

• The allocation of resources and production decisions significantly affect a society's well-being and development, as they determine the availability and distribution of goods and services that satisfy the needs and desires of its citizens.

Q3: How do societies make decisions about resource allocation and production, and what factors influence these choices?
Ans:

• Societies make these decisions through economic, political, and social processes, often guided by government policies, market forces, public demand, and cultural values. 
• Factors like economic stability, technological advancement, and societal priorities also influence these choices.

Passage - 2

Direction: Read the following Passage and Answer the Questions.

Who gets how much of the goods that are produced in the economy? How should the produce of the economy be distributed among the individuals in the economy? Who gets more and who gets less? Whether or not to ensure a minimum amount of consumption for everyone in the economy. Whether or not elementary education and basic health services should be available freely for everyone in the economy. Thus, every economy faces the problem of allocating the scarce resources to the production of different possible goods and services and of distributing the produced goods and services among the individuals within the economy. The allocation of scarce resources and the distribution of the final goods and services are the central problems of any economy. 

Q1: What are the central economic questions that every economy must address, as outlined in the passage?
Ans:

• Every economy must address questions related to the allocation of scarce resources to produce various goods and services, as well as how to distribute these products among individuals. 
• Key questions include determining the distribution of goods, addressing issues of inequality, and ensuring minimum consumption levels and access to basic services.

Q2: Why are the allocation of resources and the distribution of goods and services considered central problems in economics?
Ans:

• These issues are central because they directly impact the well-being and equity of a society. 
• They determine who gets what, how resources are utilized, and whether essential services like education and healthcare are accessible to all.

Q3: How do economic systems and policies influence the resolution of these central economic problems, and what are some of the common approaches to addressing resource allocation and distribution in different economies?
Ans:

• Economic systems, such as market-based or planned economies, and government policies play a significant role in addressing these problems. 
• Common approaches include taxation, social welfare programs, public services, and regulations that aim to balance resource allocation and ensure fair distribution of goods and services.

Passage - 3

Direction: Read the following Passage and Answer the Questions.

A market, as studied in economics, is an institution which organises the free interaction of individuals pursuing their respective economic activities. In other words, a market is a set of arrangements where economic agents can freely exchange their endowments or products with each other. It is important to note that the term ‘market’ as used in economics is quite different from the common sense understanding of a market. In particular, it has nothing as such to do with the marketplace as you might tend to think of. For buying and selling commodities, individuals may or may not meet each other in an actual physical location.

Q1: How does economics define a market, and what is the primary function of a market as an institution?
Ans:

• In economics, a market is defined as an institution that facilitates the free exchange of goods and services among individuals. 
• Its primary function is to organize and enable economic agents to trade their endowments or products with one another.

Q2: How does the economic concept of a market differ from the common understanding of a marketplace, and what key distinction is emphasized in the passage?
Ans:

• The economic concept of a market differs from the common understanding of a physical marketplace. 
• It highlights that a market, in economic terms, does not necessarily involve face-to-face interactions in a physical location. Instead, it refers to the broader system where economic agents can engage in trade and exchange.

Q3: What is the essential nature of a market in economics, and how does it promote economic activities and transactions among individuals?
Ans:

• A market in economics is essentially a framework that fosters the voluntary exchange of resources and products. 
• It promotes economic activities by allowing individuals to freely trade their endowments or goods, enabling specialization, efficiency, and the allocation of resources based on supply and demand.

Passage - 4

Direction: Read the following Passage and Answer the Questions.

In microeconomics, we study the behaviour of individual economic agents in the markets for different goods and services and try to figure out how prices and quantities of goods and services are determined through the interaction of individuals in these markets. In macroeconomics, on the other hand, we try to get an understanding of the economy as a whole by focusing our attention on aggregate measures such as total output, employment and aggregate price level.

Q1: What is the primary focus of microeconomics, and how does it differ from the focus of macroeconomics?
Ans:

• Microeconomics primarily examines the behavior of individual economic agents in various markets for goods and services. It analyzes how prices and quantities in these markets are determined through individual interactions. 
• In contrast, macroeconomics concentrates on understanding the economy as a whole, emphasizing aggregate measures like total output, employment, and the overall price level.

Q2: What are the key areas of interest in microeconomics?
Ans:

• Microeconomics focuses on analyzing consumer behavior, producer decisions, market structures (e.g., competition, monopoly), and the allocation of resources among various goods and services. 
• It also explores topics such as supply and demand, elasticity, and the impact of government policies on individual markets.

Q3: What are the key areas of interest in macroeconomics, and what are some examples of aggregate measures examined in this field?
Ans:

• Macroeconomics examines topics like economic growth, inflation, unemployment, and the overall performance of the economy. 
• It uses aggregate measures, including Gross Domestic Product (GDP), the Consumer Price Index (CPI), and the unemployment rate, to assess the health and stability of an economy on a national or global scale.