MP Board Class 12th Economics Unit 1 Micro Economics Introduction Important Questions

MP Board Class 12th Economics Unit 1 micro Economics Introduction Important Questions with Answers with pdf file Solutions.

Micro Economics Introduction Important Questions

Micro Economics Introduction Objective Type Questions

Question No.1. Choose the correct answers:

Question 1. Indian economy is:
(a) Centrally planned economy
(b) Market economy
(c) Mixed economy
(d) None of these.
Answer:
(c) Mixed economy

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Question 2. Who used the word ‘micro’ for the first time:
(a) Marshall
(b)Boulding
(c) Keynes
(d) Ragnar Frisch
Answer:
(d) Ragnar Frisch

Question 3. Who said economics is the ‘Science of wealth:
(a) Prof. Robbins
(b) Prof. J.K. Mehta
(c) Prof. Marshall
(d) Prof. Adam Smith
Answer:
(d) Prof. Adam Smith

Question 4. What is the shape of production possibility curve:
(a) Concave to the origin
(b) Concave
(c) Straight line
(d) None of the above.
Answer:
(a) Concave to the origin

Question 5. The reason for downward shape of production possibility curve is:
(a) Increasing opportunity cost
(b) Decreasing opportunity cost
(c) Same opportunity cost
(d) Negative opportunity cost
Answer:
(b) Decreasing opportunity cost

Question 6. The point of optimum utilization of resources lies on which side of PPC curve:
(a) Towards left
(b) Towards right
(c) Inside
(d) Upwards
Answer:
(d) Upwards

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Question 2. Fill in the blanks:

  1. Every person has ………………… quantity of goods.
  2. ……………………economics is the study of individual economic units.
  3. Opportunity cost ………………….. in production list.
  4. Micro and Macro-economics are ……………………… to each other.
  5. Economic growth is related to ………………………… economics.
  6. Economy is a group of ………………….. units.
  7. Mixed economy is composed of ………………………. and …………………………
  8. The goods and services which help in the production of other goods and services are ………………………. goods.

Answer:

  1. Few
  2. Micro-economics
  3. Changes
  4. Complement
  5. Macro
  6. Production
  7. Socialism, Capitalism
  8. Intermediate

Question 3. State true or false:

  1. Production possibility curve is convex towards main point.
  2. Central problem in the capitalist economy is solved by price mechanism.
  3. An economy can be capitalist, socialist or opportunist.
  4. Today all economics of the world are almost mixed economics.
  5. Macro-economics is the study of the problems of unemployment, price inflation etc.
  6. In socialism, the feeling of personal profit is prominent.

Answer:

  1. False
  2. True
  3. False
  4. True
  5. True
  6. False

Question 4. Match the following:

  1. The mechanism of micro-economics (a) Capitalist economy
  2. Basic financial problem (b) All resources are efficiently used
  3. No state interference (c) Price analysis
  4. No restrictions on trade (d) Lamination and election
  5. Main assumptions of production possibility curve (e) Open Economy

Answers:

  1. (c)
  2. (d)
  3. (a)
  4. (e)
  5. (b)

Question 5. Answer the following in one word/ sentence:

  1. Which economy is adopted in India ?
  2. What is the production possibility curve towards its origin ?
  3. The governmentalization of exploitation is the fault of which economy ?
  4. The struggle class is the specialty of which economy ?
  5. Which economy has limited the scope of private sector ?
  6. What is the heart of all the institutions of capitalism ?
  7. What are central problems of an economy known as ?
  8. Based on priorities, who determines the production area and quantity of production ?

Answer:

  1. Mixed economy
  2. Concave
  3. Socialist
  4. Capitalism
  5. Socialism
  6. Profit
  7. Basic work
  8. Central Planning Authority

Micro Economics Introduction Very Short Answer Type Questions

Question 1. What do you mean by macro-economics ?
Answer: Macro-economics aims at dealing with the aggregates and averages. It is not interested in the individual items but as total savings, total consumption, total employment, aggregate demand, etc.

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Question 2. What do you mean by micro-economics ?
Answer: Micro-economics studies the economic actions of individuals i.e., particular firm, individual households, wages, interest, profit etc. In other words it is infact a microscopic study of the economy.

Question 3. What is the central point of macro-economics ?
Answer: The central point of marco-economics is the analysis of national income.

Question 4. What do you mean by goods ?
Answer: All physical, tangible objects which satisfy human wants and need i.e., objects which possess utility, are called goods.
For example : Tables, cars, etc.

Question 5. What do you mean by economic activity ?
Answer: Economic activities are those activities which increases the material, welfare of man and which are used for increasing wealth and welfare.

Question 6. How are services ?
Answer: Services are non – material, intangible goods which can not be seen, touched or stored and have power to satisfy human wants and needs. For example, services provided by doctor.

Question 7. Write the meaning of ‘a person’.

Answer: By person, we mean the decision taking units.

Question 8. How many branches are there of Economics ?
Answer: Economics has two branches:

  1. Micro-economics
  2. Macro-economics

Question 9. What to you mean by resources ?
Answer: Those goods and services which are used to produce other goods are known as resources. They are traditionally known as factors of production.

Question 10. What do you mean by economy ?
Answer: It refers to the sum total of economic activities in an area, which may be a village, a city, a district, or a country as a whole. They provide source of livelihood.

Micro Economics Introduction Short Answer Type Questions

Question 1. What do you mean by macro-economics ? Write its two characteristics.
Answer: Macro-economics:
Macroeconomics is the study of aggregate factors such as employment, inflation and gross domestic product and evaluating how they influence the economy as a whole.

The characteristics of macro-economics are as follows:
1. Broader perspective:
The concept of macro-economics is broader. In it small units are not given importance but with the help of it National and International economic problems.

2. Broad analysis:
In macro-economics broad analysis is given importance. For example, under the subject matter of macro-economics we study the monetary and fiscal policies of the government. It studies the general problems of national level like the effects on – monetary policy, fiscal policy, general price level, general employment etc. If the effect of public finance and public expenditure is good on society then we can conclude that the . effect of it is also good on each person of the society.

Question 2. “Scarcity is the mother of all economic problems”. Explain.
Answer: The statement is true, no matter, how well a particular economy is endowed with resource, these resources will be relatively scarce to fulfill its unlimited wants. Moreover, these scarce resources have alternative uses and can be allocated to the production of different goods and services. Thus, it is due to the scarce availability of resources to fulfill the different and competing unlimited wants that an economy faces the economic problem of choice. Thus, it is rightly said that Scarcity of resources is the mother of all economic problems.

Question 3. 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.g., it deals with the analysis of questions like what are the causes of unemployment.

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Question 4. Write main assumptions of production possibility curve.
Answer: Following are the main assumptions of production possibility curve:

  1.  Economy produces only two goods X and Y in different proportions.
  2.  Amount of resources available in an economy are given and fixed.
  3.  Resources are not specific i.e., they can be shifted from the production of one goods to the other goods.
  4.  Resources are fully employed, i.e., there is no wastage of resources.
  5.  State of technology in an economy is given and remains unchanged.
  6.  Resources are efficiently employed.

Question 5. What is production possibility curve ? Explain with example.
Answer: Production possibility curve shows graphical presentation of various combination of two goods that can be produced with available technologies and given resources assuming that the resources are fully and efficiently employed. The production possibility curve is also known as transformation curve. PPC can be explained with the help of example and imaginary schedule.

Question 6. A school teacher takes two years of leave for study to get the degree of doctorate of philosophy from a university. His monthly income is Rs 35,200 and the fees of research degree is Rs 40,000. What will be his opportunity cost for doctorate degree ?
Answer: Opportunity cost = (35,200 × 12 x 2) + 40,000
= (35,200 × 24) + 40,000
=  Rs 8,84,800..

Question 7. What is studied in Economics ?

Answer:
It is an important question that what should be studied under subject matter of economics. Wants are unlimited but resources are limited. It is decided in economics that row resources should be economically and more efficiently used. Study of subject-matter of economics includes the rational use of resources. The ultimate air of any economy is to have maximum economic welfare.

In any economy, what economic system we use is based on macro and micro-economics. In micro-economics, we study principle of consumers, price determination, producers behavior, monetary policy, inflation, Government budget, exchange rate etc. is studied.

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Micro Economics Introduction Long Answer Type Questions

Question 1. Distinguish between Micro-economics and Macro-economics.

Answer:
Differences between Micro-economics and Macro-economics;

Differences between Micro-economics and Macro-economics

Question 2. Define micro-economics and explain its characteristics.

Answer: The word ‘micro’ is originated from the Greek word micros; which means small. Micro-economics studies the economic actions of individuals. Under this branch the whole economy is divided into small individual parts i.e., a particular firm, individual household, wages, interest, profit etc. According to Chamberlain, “The micro model is built solely on the individual and deals with interpersonal relations only.”

Characteristics:
Followings are the characteristics of micro-economics:
1. Study of individual units :
The first characteristics of micro-economics is that it studies individual units. It helps to explain personal income (individual income), individual production, individual consumption etc. Micro-economics studies the individual problems and helps in analyzing the whole economic system.

2. Study of small variable:
Micro-economics gives importance to the study of small variable. These variables have such little influence that they do not affect the whole economy.
For e.g., a single consumer by his consumption or a single producer by his production cannot have influence over the demand and supply of whole economic system.

3. Determination of individual price :
Micro-economics is also called the price theory. It determines the individual price of different products by analyzing the demand and supply i. e., behavior of buyers and sellers.

4. Based on the concept of full-employment:
While studying micro-economics the concept of full employment is taken into consideration.

Question. 3. Explain the subject matter of macro-economics under five headings.
Answer: We can study the subject matter of economics under the following heads :

1. Income and level of employment:
Income and level of employment is the main subject matter of Macro-economics. Level of employment and income depends on effective demand. Effective demand is determined by total expenditure.

2. Price theory :
It includes the study of inflation and deflation. Macro-economics also studies the normal level of prices of goods. It also studies the causes of inflation.

3. Theory of economic growth:
Macro-economics studies the economic growth by economic planning we can solve the problems of economic growth.

4. Theory of distribution :
During distribution of shares of national income many problems arise. How much should be paid as wages, what should be rent, how much interest should be paid all are the main elements of the subject matter of macro economics.

5. Theory of public finance:
Public revenue, public expenditure, public debts, taxation, fiscal policies are the subject matter of macro-economics.

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