NCERT Class 12 Economics Chapter 1 Question Answers & Notes Introduction To Macro Economics Easy PDF

WhatsApp Group (Join Now) Join Now
Telegram Group (Join Now) Join Now

NCERT Class 12 Economics Chapter 1 Question Answers & Notes Introduction To Macro Economics Easy PDF, Introduction to Macro Economics Class 12 Notes CBSE Macro Economics Chapter 1 (Free PDF Download)

Introduction to Macro Economics

Economics is the social science that deals with the use of resources with scarce and alternative uses for the production of goods and services by society. Economics – Economics is the science of human behaviour which

The relationship is to allocate limited resources in such a way that the consumer maximizes his satisfaction, the producer maximizes his profit, and the society maximizes its social welfare. Economics is the science of human behaviour concerned with the allocation of scarce means in such a manner that consumers may maximise their satisfaction. Producers may maximise their profits and the society may maximise its social welfare.)

Modern economics has analyzed these problems with the production possibility curve, in which the possibilities of production of different goods can be estimated by using different means of production in many alternative combinations.

The methods of economic problems and the principles made for their solution are called economic analysis. In modern economists, economics is based on the analysis of economic problems.The subject matter has been divided into microeconomics and macroeconomics. relationship between the two happened, There is also a difference between them.

Economics – is a science of human behaviour related to the distribution of scarce resources in alternative uses in such a way that maximum satisfaction to a consumer, maximum profit to a producer and maximum social welfare to the whole society can be achieved.

Resources / Means are scarce compared to human needs and they have alternative uses. Scarcity of resources and their alternative uses.

Because the problem of choice arises. Microeconomics is the branch of economics that studies economic problems (or economic issues) related to individual economic units, such as a consumer or a producer. Resource Allocation Problem Microeconomics is the main element.

Macroeconomics – is the branch of economics that studies economic problems (or economic issues) related to the economy as a whole; Aggregate Demand, Aggregate Supply, National Income and National Product and some important Macro Variables. The balance of national income (or national product) is a central issue of macroeconomics.

In a market economy, all important economic decisions are decided on the basis of market forces. In this economy economic agents freely exchange products. There is no interference from the government in this type of system.

Differentiate between microeconomics and macroeconomics.

(i) In microeconomics, economic relations or economic problems are studied at the individual level, such as the economic problems of a consumer, a firm, a family.In macroeconomics, economic relations or economic problems are studied at the level of the entire economy.
(ii) Microeconomics is concerned with the determination of output and price in an individual firm or industry. Accordingly, microeconomics is called price in short.Macroeconomics is concerned with aggregate output and the general price level in the economy as a whole. by determination. Accordingly, macroeconomics is briefly called the theory of income and employment.
(iii) The study of microeconomics assumes that the macro variables remain constant. For example, when studying the determination of output and price in a firm or industry, it is assumed that total output remains constant.The study of macroeconomics assumes that individual variables remain constant. For example, when we study the determination of total output and level of income, it is assumed that the distribution of income remains fixed.
(iv) In the context of microeconomic problems such as commodity pricing or factor pricing, the role of the market system is of great importance.In the context of the problems of microeconomics, in the context of the problems of macroeconomics, such as commodity price determination or resources, such as unemployment, poverty and inflation, the role of the government in the problems of the market, in the problems of price determination, the role of the system is of great importance.

NCERT Class 12 Economics Chapter 1 Question Answers

Chapter NameIntroduction to Macro Economics
Chapter numberChapter 1
Part A
Medium English
Study MaterialsQuestion Answers & Notes
Download PDFNcert class 12 economics chapter 1 pdf
NCERT Class 12 Economics Chapter 1 Notes Introduction To Macro Economics

very short answer-type questions

1. What is called an economic problem?

Ans. Due to limited resources, the problem of choice is called an economic problem.

2. What is meant by ‘scarcity of resources’?

Ans. This means that resources are scarce in the context of collective needs, not in the context of a single need.

3. Define the production possibility curve.

Ans. Various production possibilities of two goods are possible with the optimum use of given resources. The diagrammatic representation is called the production possibility curve.

4. How are economic problems solved in a capitalist economy?

Ans. With the help of the ‘price mechanism’.

5. State any two central problems of an economy.

Ans. (i) What to produce (ii) How to produce.

6. Define opportunity cost.

Ans. Opportunity cost is the amount of a given good that is required to produce another good to do this, you have to sacrifice.

7. Define marginal opportunity cost on the production possibility curve.

Ans. It is the rate at which we have to give up a commodity in order to produce an additional unit of a given commodity.

8. What is meant by increasing opportunities on the production possibilities curve?

Ans. It means that for the production of an additional unit of one good, the rate of the sacrifice of another good goes on increasing.

9. What is the use of surplus production?

Ans. Surplus production can be used to exchange for other goods and services is done for

10. What does a person do with his resources?

Ans. Resources are used to satisfy their needs.

11. Write the meaning of the object.

Ans. By commodity are meant the material things which are used to satisfy one’s needs.

12. Write the meaning of service.

Ans. Service refers to non-material things which are used for the satisfaction of needs.

13. Are resources unlimited compared to needs?

Ans. No, resources are limited as compared to the requirements.

14. What is the main reason for selection?

Ans. Rarity is the main reason for selection.

15. Write the meaning of consumer.

Ans. The person who consumes goods or services to get satisfaction is called a consumer.

16. Write the utility of exchange.

Ans. The gap between exclusivity in production and diversity in consumption for each individual exchange process is useful in bridging the gap.

17. Write the definition of rarity.

Ans. ‘A sample’ attempts to capture the essential features of reality. Ans. A person has less resources than his needs, This is called rarity.

18. When is a producer rational?

Ans. A producer is said to be prudent when he has a clear estimate of how much profit he will get from a possible sale at each stage of production.

19, Write the meaning of equilibrium price.

Ans. The price level at which the quantity demanded and the quantity supplied of a commodity is equal, is called the equilibrium price.

20. Write the meaning of equilibrium quantity.

Ans. The quantity bought and sold in the market at the equilibrium price is called equilibrium quantity.


1. Explain the relationship between rarity and selection.

Ans. Rarity and selection are inextricably linked. If there was no shortage of things, there would be no question of the problem of selection arising. If everyone gets what he wants, then no one has to face the problem of choice.

The talk of freedom from lack is just a matter of imagination, in the real world we always have to deal with lack. No matter how rich a man is, he lacks something or the other. Every person has different and many needs but in order to fulfill the resources are limited.

That’s why we have to take into account our needs and the availability of resources. You have to prioritize your needs accordingly. Thus, rarity and selection go hand in hand.

2. “Economics is choosing in the presence of scarcity.” Explain.

Ans. The basis of economics Due to the scarcity, it is necessary to select. nearly every country is blessed with both natural and man-made resources. The number of people dependent on these resources is also not less.

Therefore, it is natural that resources are not equally available to each and every individual and they have to make choices according to their needs to make optimum use of the limited resources available to them. The choice can be at the individual or national level. Thus, it is clear that economics is concerned with choosing in the face of scarcity.

3. Name the central problems of the economy.

Ans. Every economy has to face the following central problems.

(i) What is to be produced is a problem of allocation of resources.

(ii) How to produce the commodity is a problem of choice of production technique.

(iii) For whom to produce, it is a problem of distribution of production. In addition to the above three problems, the following three problems are also being considered central problems-

(iv) The problem of efficient use of resources.

(v) The problem of full utilization of resources.

(vi) Problem of economic development.

4. What is production possibility curve?

Ans. In a simple economy, it is possible to produce many combinations of two goods (such as rice and guns) by making full use of the given factors. These combinations are called production possibilities.

When these combinations are presented in the form of a picture, the curve formed is called the production possibility curve. The production possibility curve is concave towards the origin.

When resources increase or production technology improves, the production possibility curve shifts to the right. If resources are not being optimally utilised, the operating point lies inside the production possibility curve

Will happen.

5. Why is the production possibility curve concave towards the origin?

Ans. The production possibility curve is concave to the origin when the marginal opportunity cost is increasing. Marginal opportunity cost, on the production possibility curve, is defined as the reduction in output of another good in order to increase output per unit of a given good.There are two reasons why the production possibility curve is concave towards the origin.

(i) Production possibility curve is based on the law of diminishing returns. Therefore, if

The more a commodity is produced, the less productive the factor units used in its production become; That is, the cost of production of additional units increases.

(ii) Secondly, opportunity cost arises when resources specialized in the production of a particular good are diverted to the production of another good for which they are not specialized. Thus, the shift of resources from more productive to less productive uses indirectly implies a decline in their productivity.

As a result, more such resources are required to produce an additional unit of the second good. Thus, marginal. The opportunity cost goes up, making the production possibility curve concave.

6. Give two examples of the underutilization of resources. 

Ans. The following are two examples of underutilization of resources:

(i) Technological backwardness is the most important example of the underutilization of resources. In the absence of technology, resources cannot be fully exploited.

(ii) Lack of proper division of resources or problem of division of labour. In the absence of proper division, most of the resources either remain idle or are used inefficiently.

7. What will happen when the units producing wheat in a village produce wheat in excess of the requirement?

Ans. If the people in the village do not need the amount of wheat that the production units of the village produce, then either the people of the village will exchange the surplus production for other goods and services or divert some resources from the production of wheat to those resources. Can be engaged in the production of goods and services which will be in high demand in the village.

8. Give the definition of consumption and production goods. two examples of each write.

Ans. Consumer Goods The goods which are used for consumption are called consumer goods. Like food, clothes etc. Producer goods are those goods that are used to produce other goods and services. For example, machinery, raw material etc.

9. A person owns only a certain amount of things. explain.

Ans. A person does not have as many things as he needs. passes available nor can he produce them all. He can own or produce only some of the available resources.

In this way, each person is unique in terms of ownership and production of goods, whereas all the goods available and produced have a long chain in the economy.

10. How is the gap between specialized production and mass consumption filled?

Ans. Production due to scarcity of resources and the unlimitedness of needs there is a lot of difference in uniqueness and diversity of consumption. to bridge the gas exchange process is used. In modern economies consumption, production and exchange activities go on continuously in the market.

11. Write the meaning of the means of production. Write the types of factors of production.

Ans. Those goods and services which are used to produce other goods and services, those which are used to produce other goods and services are called means of production. The means of production are divided into two categories-

(i) Resource Input / Main Resource / Primary Resource-Land and Labor

(ii) Intermediate goods Non-factor input / secondary factor- produced goods that can be used for other goods.Used in the production of For example, sugar in the manufacture of sweets, rubber in the manufacture of tyres, etc.

12. Write the meaning of market.

Ans. Any set of arrangements by which people have the freedom to conduct economic activities freely is called a market. In a market, a person can sell his surplus production to those who need his goods. The money received from the sale can be used by the person to buy the goods and services that he needs.

13. Explain discretion with the help of an example.

Ans. Due to the scarcity of resources, people try to make better use of resources. does. It is assumed that each consumer has a clear idea of ​​preferences regarding the available sets of goods.

In this sense, the consumer is considered to be rational because he chooses according to his interests to satisfy the needs, hence he is rational in using the resources and satisfying his maximum needs.

14. When is an economy said to be in equilibrium?

Ans. No single economic unit can achieve equilibrium. MarketDiscretionary individual economic units in the economy automatically solve economic problems by conducting economic activities according to their interest and achieving a state of equilibrium.

The invisible forces become active and attain a state of balance. Each economic unit operates in a manner that is compatible with other economic units. Allocation of final goods is based on the basis of allocation of resources and their availability. When the economy does not want any change then it is said to be in equilibrium.

15. Write the names of two main branches of economics, and also write their meaning.

Ans. (i) The subject matter of economics is mainly studied under two branches, which are as follows-

(i) Microeconomics – That branch of economics that deals with individual economic units. Behavior is studied, it is called microbiology. This branch shows thatHow different units interact with each other to determine the quantity and price of a commodity. determines.

Macroeconomics – The branch of economics in which the behaviour of collective economic units is studied is called Macroeconomics. In this branch, the entire economy is studied as an economic unit.

16. Give examples of questions studied in macroeconomics.?

Ans. The following are the major factors studied in macroeconomics-

(i) What are the reasons for the unemployment of resources?

(ii) Why does the general price level rise?

(iii) Are all the resources of the economy being fully exploited?

(iv) Equilibrium level of income how to determine (v) How to determine aggregate supply?

(vi) What is the level of aggregate supply in the economy?

17. Give examples of the subject matter of microeconomics.

Ans. Some important topics of microeconomics are as follows-

(i) Demand for a commodity.

(ii) Supply of a commodity.

(iii) Determination of the price of a commodity

(iv) Equity of a firm.

(v) Cost of production of a commodity

(vi) Revenue received by a firm.


1. Describe the subject matter of economics.

Ans. Subject matter of economics: Under the subject matter of economics, all those economic activities are studied which are done due to unlimited needs and limited resources.

(a) Economic Activity: Economic activity is that which is concerned with the production of all those goods,It is through consumption and investment that there is utility.

(i) production,

(ii) investment,

(ii) use

(iv) exchange

(b) Micro and macro level of economic activity Economic activities can be studied at the individual level or at the level of the whole economy. Therefore, the following are the main parts of the subject matter of economics: (i) Microeconomics, (ii) Macroeconomics

Difference between micro and macroeconomics Economic activities at the individual level are studied in microeconomics. On the contrary, in macroeconomics, economic activities are studied at the level of the entire economy.

(c) Economic systems: Economic systems are divided into the following parts

(i) capitalism, (ii) socialism, (iii) mixed economy

(d) Economic Policies In the functioning of economic systems, there are problems like unemployment, price rise, B poverty, recession, etc. Policies have been made to solve them, which are as follows:

(i) Monetary Policy, (ii) Revenue Policy, (iii) Price Policy, (iv) Economic Planning, (v) International Liquidity.

2. What is the economic problem? Why does it arise? Or, the economic problem is a problem of choice. Discuss the statement.

Ans. The economic problem is fundamentally a problem of scarcity of resources due to which the problem of choice arises.

Human needs are unlimited, but resources are limited. Therefore, all the needs cannot be satisfied with limited resources. The intensity of wants varies and there are alternative uses of limited resources.

In this type of background, every consumer tries to get maximum satisfaction from limited resources. So he has to make a choice as to which goods he should consume and in what quantity. As soon as the problem of election arises, the economic problem is born.

RealityIn India the problem of elections is fundamentally an economic problem. The problem faced by an individual consumer due to scarcity of resources also arises collectively in the face of an economy. Due to the scarcity of resources, an economy has to choose between the following:

(i) Which item should be produced in what quantity?

(ii) By which technology should the production be done?

(iii) For whom should the production be done?

These three problems are called central problems or basic problems of the economy. This is because all other economic problems revolve around these problems. These problems arise in all economies.

According to the above analysis, the following are the reasons for the emergence of economic problems-

(i) Human needs are unlimited- Human needs are unlimited. When one need is satisfied, new needs keep on arising. There is also a difference in the intensity of the needs.

(ii) Limited resources – The means of satisfying wants are limited. The scarcity of resources is a relative thing. There may be an abundance of resources to satisfy a particular need, but there are few resources to satisfy all the needs.

(iii) Alternative use of resources – Many uses of limited resources are possible, such as electricity can be used for lighting or as a means of energy.

(iv) Problem of choice – Man’s needs are unlimited and resources are limited, so the problem of choice arises as to what, how and for whom to produce. The problem of election is the economic problem.

If resources were unlimited like human needs, then the problem of choice would not have arisen, nor would there have been any economic problem. In other words, scarcity of resources is the mother of all economic problems. In short, unlimited wants and limited resources are the two basic pillars on which the structure of all economic problems stands.

13. Is economics a real science or an ideal science? Explain.

Ans. Real science means that science which establishes the relationship between cause and effect. In other words, it examines a problem scientifically. For example, if prices have gone up, why have they gone up? In short, the problems are analyzed on the basis of facts.

Normative science, on the other hand, is concerned with the normative aspects of a problem, i.e. what should be? Under normative science, the conclusions and results are not based on facts, they are based on beliefs, such as social, cultural, political, religious etc. In short, real science is concerned with the how and why and ideal science is ‘what should be’. From.

The difference between the two can be explained by the example of the increase in interest rates. Under definite science, it will be found out why the rate of interest has increased and how it can be reduced whereas under ideal science it will be seen whether this increase is good or bad. Here are three statements about real and ideal science.

(1) The main reason for the price rise in India is the increase in money supply.

(ii) The increase in food grain production in India is mainly due to an increase in irrigation facilities and an increase in consumption of chemical fertilizers.

(iii) Population growth rate partly high birth rate and the partly high death rate has been high due to a reduction in ideal science

(i) Inflation is better than deflation.

(ii) Excess production of luxury goods is not good for a country like India.

(iii) Inequality in the distribution of wealth and income should be reduced.

Geography भूगोल
Political science राजनीति विज्ञान
English SubjectResult
Hindi SubjectHistory answer keys
Sociology समाज शास्त्र


1. When is a market in equilibrium?

Ans. When the quantity demanded of a commodity in the market at a given price level is equal to the quantity supplied in the market, then the market is in equilibrium.

2. Write the meaning of the central problem of an economy.

Ans. The allocation of scarce resources to produce various goods is called the central problem of the economy.



Leave a Comment