Question:
Discuss the central problems of an economy.
Answer:
The three central problems of an economy are:
- What to produce? [CBSE 2004C, 05, 06, 08, 08C, 09, 10; AI 2006, 10]
(a) What to produce refers to a problem in which decision regarding which goods and services should be produced is to be taken.
(b) Since its resources are limited, every economy has to decide what commodities are to be produced and in what quantities.
(c) The guiding principle for an economy here is to allocate resources in such a way that gives maximum aggregate utility to the society.
- How to produce?[CBSE 2014C, 2006, 08C, 10, AI 2001, 05, 08, 10, 11]
(a) How to produce refers to a problem in which decision regarding which technique of production should be used is made.
(b) Goods and services can be produced in two ways: by using labour intensive techniques, and by using capital-intensive techniques.
(c) The guiding principle for an economy in such a case has to decide about the techniques of production on the basis of cost of production. Those techniques of production should be used which lead to the least possible cost per unit of commodity or service.
- For whom to produce?[CBSE 2014, 2005C, AI 2013]
(a) For whom to produce refers to a problem in which decision regarding which category of people are going to consume a good, i.e., economically poor or rich.
(b) As we know, goods and services are produced for those who can purchase them or have the capacity to buy them.
(c) Capacity to buy depends upon how income is distributed among the factors of production. The higher the income, the higher will be the capacity to buy and vice versa. So, this is a problem of distribution.
(d) The guiding principle is that the economy must see here that important and urgent wants of its citizens are being satisfied for the maximum possible extent or not.
Introduction to Microeconomics
Q 1.
A country's resources are fully and p efficiently employed. The problem of scarcity exists. What advice would be given to raise the efficiency level of the human resource to fight scarcity?
Q 2.
Massive unemployment will shift PPC to the left. Defend or refute.
Q 3.
Giving reason comment on the shape of Production Possibilities curve based on the following schedule.
Q 4.
A doctor has a private clinic in New Delhi and his annual earnings are Rs 10 lakh. If he works in a government hospital in New Delhi, his annual earning will be Rs 8 lakh. What is the opportunity cost of having a clinic in New Delhi?
Q 5.
Explain the meaning of opportunity cost with the help of production possibility schedule.[CBSE, All India 2013]
Q 6.
"An economy always produces on but not inside PPC. Defend or refute.
Q 7.
Give two examples of growth of resources.
Q 8.
Name any three variables of macroeconomics.
Q 9.
How does Maruti Udyog Ltd. fix the prices of its cars, is it studied in macroeconomics?
Q 10.
Giving reason comment on the shape of Production Possibilities curve based on the following schedule.
Q 11.
What is meant by economy?
Q 12.
Which type of science is economics?
Q 13.
Giving reasons, state whether the following statements are true or false.
An economy always manages to meet all the needs of the people living in the country.
Q 14.
India is a labour abundance and capital scarce economy. Which technique of production should be used to produce the commodity?
Q 15.
As water resources are limited in our country, how can we economise the water resources so that it could not cause a future problem for us? Give any two suggestions.
Q 16.
There are various sources of income a teacher has; such as,
- He can earn Rs 40000 from teaching in school.
- He can earn Rs 50000 by tuition/ coaching
- He earns Rs 60000 by writing the help book guides.
What is the opportunity cost of his teaching in school? Why should he choose teaching profession?
Q 17.
Why is production possibility curve also called opportunity cost curve?
Q 18.
Why PPC is concave to the point of origin? [CBSE 2011, AI 2007]
Q 20.
State the central problems of an economy. [CBSE Sample Paper 2014]
Q 21.
Although water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox.
Q 22.
A farmer is getting more profit by producing opium rather than that of wheat. In situation of famine which crop should be produced?
Q 23.
In the context of an economy when we talk about scarcity', we refer to short supply of land.
Q 24.
Economic problem arises due to plenty of resources.
Q 25.
Only Scarce Goods' attract price."Comment.
Q 26.
Giving reason comment on the shape of Production Possibilities curve based on the following schedule.
Q 27.
State any two central problems under ‘problem of allocation of resources’.[CBSE Sample Paper 2016]
Q 28.
Economy always operates on PPC.
Q 29.
Because of destruction caused by war, a country's PPF will shift to the left.
Q 30.
"Scarcity and choice go all together". Defend or refute.
Q 31.
In an underdeveloped economy why there is the need of efficient utilization of resources?
Q 32.
The government has started promoting foreign capital. What is its economic value in the context of Production Possibilities Frontier?
Q 33.
What is meant by central problem of an economy?
Q 34.
Define Opportunity Cost. [CBSE 2007]
Or
Give the meaning of Opportunity Cost'. [CBSE 2008, 09]
Q 35.
Give one/two examples of microeconomics study.[CBSE 2004C, 09, 09C, 11C;AI 2004, 05, 07, 11]
Or
Name any three variables of micro-economics.
Q 36.
Define Production Possibility Curve and state its properties.[CBSE, All India 2013 C]
Q 37.
A Production Possibility Frontier' (PPF) is always represented as a upward sloping curve.
Q 38.
Why is it that on one hand coal is found in plenty, yet it is scarce while on the other, a rotten vegetable is rare but not scarce?
Q 39.
Name the economic value achievable when attempts are made to increase resources in the country.
Q 40.
Define microeconomics.[CBSE 2007C; AI 2005, 2012]
Or
Give the meaning of microeconomics.[CBSE 2009]
Q 41.
The problems of scarcity of resources and their alternate uses arise everywhere but particularly in backward countries. For their solution non-economic considerations can be stressed. How?
Q 42.
What is likely to be the impact of Make in India' appeal to the foreign investors by the Prime Minister of India, on the production possibilities frontiers of India? Explain.
Q 43.
What is likely to be the impact of efforts towards reducing unemployment on the production potential of the economy? Explain.
Q 44.
What do you mean by the production possibilities of an economy?
Q 45.
What is a production possibility frontier?
Q 46.
Discuss the subject matter of economics.
Q 47.
State two features of resources that give rise to an economic problem.
Q 48.
Give two examples of underutilisation of resources.
Q 49.
Define Marginal Rate of Transformation (MRT). [CBSE 2012]
Q 50.
Why do all economies have similar central problems?
