1. What is Economics?

Ans: Economics is defined by many economists in different manners in which wealth definition, welfare definition, scarcity choice definition is popular. But in my sense……………..

2. What is economics in the word of Adam smith?

Ans: Adam smith defined economics as a science of wealth according to him “The great object of political economy of every country is to increases the riches and power of that country”.

3. What is economics in the word of Robbins?

Ans: Robbins defined economics as a science of scarcity and choice according to him “Economics is the science which studied human behaviors as a relationship between ends and scare means which have alternative uses.”

4. What is economics in the word of Marshall?

Ans: Marshall defined economics as a science of material welfare. According to him “Economics is study of man’s action in the ordinary business of life. It enquires how he gets income and how he uses it.”

5. What is the difference between micro and macro economics?

Ans: Micro economics is the study of particular firms, particular households, individual prices, wages, incomes and economics at the micro level.

Macroeconomics deals not with individual quantities but with aggregate not with individual income but with national income not with individual prices but with price levels it deals with economics at the macro level.

6. What is opportunity cost?

Ans: The opportunity cost of anything is the next best alternative that is given up for it. Ex book of economics for movie ticket

7. What is production possibility curve?

Ans: The production possibility curve shows the various combinations of two goods which the economy can produce with a given amount of resources and a given technology and working with production efficiency.

8. What is capital formation?

Ans: Capital formation is a process in which accumulation of capital takes place by sacrifice some of current consumption by the individuals in any particular country.

9. What is the use of economics in the field of management?

Ans: Economics play an important role in the field of management If we think about companies strategy and business forecasting then it is fully based upon economic theories and current economic situation for example product pricing is fully based on price determination in perfectly competitive market demand and supply is fully based on law of demand and supply and elasticity so we can say that economics is the engine of management.

10. What do you mean by positive normative and welfare economics?

Positive economics- positive economics is concerned with explaining ‘what it is’ it describes theories and laws to explain observed economic phenomena. Normative economics- Normative economics is concerned with what should be i.e. what should be the prices, what should be the savings etc. Welfare economics- welfare economics is concerned with what price should be fixed that maximum social welfare is achieve

11. What is demand and what is law of demand?

Ans: the demand for a commodity is the amount of it that a consumer will purchase or will be ready to take off from the market at various given prices in a given period of time. The law of demand states that if other thing being equal, if price of a commodity raises its quantity demanded will decline.

12. What is demand curve and why demand curve slope downwards? Ans: The demand curve is a graphical representation of quantities of goods demanded by the consumer at various possible prices in a period of time. Since more is demanded at a lower price and less is demanded at a higher price so the demand curve slopes downwards.

13. What is supply and law of supply?

Ans: The supply for a commodity is the amount of it that firms are able and willing to offer for sale with respect to various price levels. The law of supply states that when the price of a commodity rises the quantity supplied of it in the market increases and when the price of a commodity falls, its quantity demand decreases, if others factors being constant.

14. What is supply curve and why supply curve slope upwards?

Ans: The supply curve is a graphical representation of quantities of a good that firms are able and willing to offer for sale with respect to various price levels. Since more is supplied at higher price level and less is supplied at lower price level. So the supply curve slopes downwards.

15. What is price elasticity of demand?

Ans: Price elasticity of demand is defined as the ratio of percentage change in quantity demanded of a commodity to a percentage change in price. I.e. price elasticity of demand indicates the degree of responsiveness of quantity demanded of a good to the change in its price.

16. What is income elasticity of demand?

Ans: Income elasticity of demand shows the degree of responsiveness of quantity demanded of a good to a small change in the income of consumers.

17. What is price elasticity of supply?

Ans: Elasticity of supply is defined as the ratio of proportionate change in quantity supplied to the proportionate change in price.

18. What is law of diminishing marginal utility?

Ans: The law of diminishing marginal utility states that “The additional benefit which a person derives from a given increase of his stock of a thing diminishes with every increase in the stock that he already has”

19. What is principal of equi-marginal utility?

Ans: The law of equi marginal utility states that the consumer will distribute his money income between the goods in such a way that the utility derived from the last rupee spent on each good is equal.

20.What are giffen goods?

Ans: Giffen goods are that type of good which consumption increases when it price increases and vice versa.

21. What is consumer surplus?

Ans: Consumer surplus is simply the difference between the price that ‘one is willing to pay’ and ‘the price one actually pays’ for a particular product.

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