class 12 unit 1 economics

Basic 9:58 AM

Tuesday, November 16, 2021

Unit :1 basic concept of economics
Total marks =6 [ 1 marks question 1 and 5 marks question 1 ]

Write short note on scarcity and choice (5 marks)

Scarcity

scarcity is a relative concept Any things is said to be scarce if its
supply is less than its corresponding demand .It is based on the idea
that all human beings want to have more and more superior goods
which creates unlimited wants but resources are limited. So a person
is always making hard effort on how to maximize the benefits by
utilizing the available resources . In this way scarcity help to develop
economic system economics .
Choice

limited resources with multiple uses unlimited wants with different
intensities ,desire of maximizing the benefit compel to decide how to use and
what to use. A rational person ranks all the possible alternatives by evaluating
cost and benefit and select the best alternative. Choice is the process of
selecting the best alternative . Choice is always associated with the opportunity
cost .Scarcity necessitates choice. Choice forward the economics because it the
common problems for all producers ,consumers and governments . The chain of
choice goes deeper and deeper the profitable use of the resources

what is opportunity cost ? 1 marks

Opportunity cost opportunity cost is defined as the second best alternative that
has scarified by an economic agent while taking an economic decision .

Explain the concept of production possibility curve (PPC)

Book page no 344 Question no 12

Write short note on the allocation of the resource

The movement of PPC from its initial position to outward or inward due to
various reason is called shift in PPC.
Causes of Outward shift in PPC

• Technological progress
• Improvement in productivity of the labor
• Innovation and availability o new raw materials in large volume .
• Increase in population

Right shift in production possibility curve denote increase in production

Causes of Inward shift in PPC
○ Technological backwardness
○ Lack of training and sill development program to the labor

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○ Lack of training and sill development program to the labor
○ Scarcity of the natural resources .
○ Decrease in population
○ Decrease in the investment in capita and equipment

Left shift in production possibility curve denote decrease in
production
The concept of shift in PPC is explained with the help of the
following figure

half page for fig

In the above figure , consumer goods and capita goods and measured
along X-axis and Y-axis respectively .AB is the initial PPC . If there
is improvement in quantity and quality of production resources AB
shift to A 1B1 position. It is out shift in the PPC .If there is decrease
in quantity and quality of production resources AB shift to A 2B2
position. It is called inward shit in the PPC

Write short note on the allocation of the resource

Allocation of resources
Human wants are unlimited but the means for satisfying them are limited. So

all wants cannot be satisfied at same time so allocation of resources is needed .
Allocation of resources is the scientific appropriate utilization of scarce
productive resources to meet the unlimited wants . The basic problems related
to allocation of resources are

1. What to produced : Resources being scarce each economics has to decide
what goods and services are to be produced .For example consumer goods
or capital goods . After deciding what to produced .Economy has to decide
its quantity

2. How to produce :After decision of goods and quantity another problem is
to decide about the method of production . Depending upon the need and
financial status of economy producer choose labor intensive or capital
intensive method because labor intensive method creates more
opportunity and capital intensive method produce more volume of
production with rapid economic growth

3. For whom to produce : due the the scarcity of resources needs of all
population cannot be satisfied at once. So targeted group should be
identify and economy should decided how the produce goods and services

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identify and economy should decided how the produce goods and services
distribute among different income groups
4. Balance sectorial development :Another central problem of an economy s
how to balance primary secondary and tertiary sector . It also needed to
balanced between rural and urban sectors ,capita and consumer goods ,
home consumption and export promotion and balance growth among
different geographical regions for better economic growth

What is division of labor ? Explain its advantages and
disadvantages .

Dividing whole work into different units and sub units according to the skill
of the labor is called the division of labor .In this system ,the production
process is split into various components then specialized factor concentrate on
their on subdivision at last all their output are combine to produce goods or
services
Simple division of labor , occupational division of labor, complex division of
labor and territorial division of labor
Advantage of division of labor

1. Right person at right place: Different workers are assigned in to different
works according to their knowledge , skill education experience under
division of labor each person will get the for for which he/she is suited

2. Increase in production : Right person at right place increase the quality
production

3. Optimum uses of machinery: Right person is continuously working at a
place with machinery .So machinery is handle correctly and efficiently .
Machine doe not remain idle .It increase the production .

4. Saving of time : under division of labor ,a person has given particular
responsibility . So labor should not go here and there . It saves the time of
labor and company

5. Development of skill: under division of labor , labor are assigned
continuously at particular work according to their quality . It develops the
knowledge, skill, professional and technical expertise ,new scientific
idea .
Disadvantage of division of labor

1. Monotony of work: : under the division of labor , a labor has to work at a
particular work for long time it create bored and monotonicity on labor.

2. Loss of responsibility : A particular work is given to particular person .
So , no one is responsible to whole work if some thing is wrong

3. Limited skill : A person is assigned at particular work. It creates the
particular or limited skill.

4. Workers become dependent : A person is assigned at particular work for
long time .He/she cannot handle whole work . it creates dependency .
Sometimes dependency creates the exploitation .

5. Fear of over production : under the division of labor , production is done in
large scale . Some time supply exceeds the demand . It creates over

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large scale . Some time supply exceeds the demand . It creates over
production .

What is marked economy? Explain its features.

An economic system in which all economic activities like production
consumption ,distribution exchange etc. are organized by private sectors
and guided by profit motives through the market forces demand and
supply .It is also called the capitalist economy free enterprise economy
eg Japan America .Government is the monitor or supervisor of economy
Features of market economy
1. .Right to a private property : In market economy individuals or private
entrepreneurs are free to invest collect and sell their properties . They have
right to organize economic activities earn income and accumulate wealth in
various forms
2. .Existence of market mechanism : in market economy equilibrium prices of
goods and services are determined by market forces demand and
supply .Other things beings equal sellers seek high prices while buyers
seeks low price .Price system help to the producers what to produce and at
what quantity to maximize the profit .

3. .consumes 'sovereignty: in market economy ,consumers are free to allocate
their income in to consumption and saving .

4. High competition : in market economy there is no government
intervention .Everyone is free to take part in economic activities of
his/her choice. There is high competition among consumers and consumers
producer and producers within themselves.
So market economy is a self organizing self propelling and self adjusting
economy where millions of buyers and sellers are interest in their own
well beings
Autonomous economy , effective use of resources perfect competition high
economic growth technological innovation formulation of capital high
economic growth creation of new goods an commodity , development of
entrepreneurship are the advantage of free economy
rule of rich , creation of inequality market instability , environment
degradation class struggle , brain drain capital outflow are the some
disadvantages

what is controlled economy ? Explain its features .

An economic system in which all the economic activities are carried out by
the central government for public welfare. It is also called the planed
economy or planed economy. for example north Korea .
Features of the controlled economy
1. Public ownership : All the available resources and factors of production are
the property of government
2. Social welfare: government take decision for the maximum social
welfare . more priority is given for basic need for all.
3. No existence of market mechanism : All the decision are taken by

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3. No existence of market mechanism : All the decision are taken by
government . All the resources are owned by government so there is no
market mechanism

4. No existence of private property: All the available resources and factors of
production are the property of government . So there is no existence of
private property .
In command economy, government owned all the factors of the production
and resources . Government take the decision for the social welfare by
maximum utilizing resources . So there is no corruption and no inequality
no insecurity . But in command , there is no private property, no
consumer right , no freedom and no competition in economy

What is mixed economy ? Explain its features

An economic system in which economic activities are partially conducted
by government and partially by the private sectors is called the mixed
economy .For example Nepal India
Features of the mixed economy
1. Public- private ownership of the production resources. In mixed
economy ,economic activities are partially conducted by government and
partially by the private sectors .So there is the partnership between the
public and private sectors .
2. Majorities of economic activities are organized by the private sectors : In
mixed economy ,major roles of the government are providing security
supplying money maintaining law and orders and developing
infrastructure . Others most of activities are carried out by the private
sectors
3. Government plays the role of facilitators: Most of the economic activties
are carried out by the private sectors for earning profit under the rules and
regulation of government . Government facilitates for the private sectors
4. Consumers freedom: in mixed economy , consumers have perfect freedom
for consumption of the goods ,and service , saving and consumption .
5. Better allocation of resources by public-private partnership:- infrastructure
and national issues are handle by government . Under the rules of the
governments, private sectors carry out the others economic activities guided
by profit motive for their self interest. So, mixed economy is the good
partnership of public and private partnership.
In mixed economy , government is guided by the social and national
welfare .Private is guided by profit motive .In mixed economy ,economy
gets the benefits of both the free and controlled economy
But , there is possibility of the corruption and unnecessary competition
between the public private sectors . There may be influence of the big
private sectors and delay in decision

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