8: Building
Blocks in Economics — The Problem of Choice
SECTION
A: MULTIPLE CHOICE QUESTIONS
Q1. The word 'Economics' is
derived from which language?
a) Latin b) French
c) Greek d) German
Answer: c) Greek
Q2. The Greek word 'oikos'
means:
a) Management b) Household
c) Wealth d) Market
Answer: b) Household
Q3. The Greek word 'nemein' is
best translated as:
a) Household b) Management
c) Wants d) Resources
Answer: b) Management
Q4. Which of the following is
a 'need' rather than a 'want'?
a) Jewellery b) Vacation
c) Food d) Luxury car
Answer: c) Food
Q5. Human wants are:
a) Limited and constant b) Unlimited and keep changing
c) Fixed by the government d) Same for everyone
Answer: b) Unlimited and keep
changing
Q6. Which of the following is
NOT a factor of production?
a) Land b) Labour
c) Capital d) Scarcity
Answer: d) Scarcity
Q7. Resources used for
production of goods and services are called:
a) Wants b)
Needs
c) Resources d) Prices
Answer: c) Resources
Q8. Natural resources include:
a) Capital and technology b) Water and coal
c) Machines and money d)
Labour and skill
Answer: b) Water and coal
Q9. The value of the next best
alternative given up while making a choice is called:
a) Market price b) Opportunity cost
c) Demand d)
Production cost
Answer: b) Opportunity cost
Q10. In the farmer's example,
if more barley is grown, then:
a) More wheat is also grown b) Less wheat is grown
c) Wheat production remains unchanged d)
Land is left unused
Answer: b) Less wheat is grown
Q11. The Production
Possibility Curve (PPC) is generally:
a) Upward sloping b) Horizontal
c) Downward sloping d) Vertical
Answer: c) Downward sloping
Q12. All points on the PPC
represent:
a) Wastage of resources b) Maximum output using resources
efficiently
c) Minimum output d) Government-fixed output
Answer: b) Maximum output using
resources efficiently
Q13. On the PPC graph of
barley and wheat, the x-axis represents:
a) Wheat b) Barley
c) Money d) Labour
Answer: b) Barley
Q14. Point A on the PPC (0
barley, 100 wheat) shows:
a) Only barley is produced b)
Only wheat is produced
c) Equal barley and wheat d)
No production
Answer: b) Only wheat is produced
Q15. The PPC helps in:
a) Fixing prices only b)
Planning and decision-making
c) Increasing wants d) Reducing population
Answer: b) Planning and
decision-making
Q16. Economics deals with:
a) Only government spending b)
Optimising use of limited resources to satisfy needs and wants
c) Only household cooking d) Only
foreign trade
Answer: b) Optimising use of
limited resources to satisfy needs and wants
Q17. Which of the following is
an economic entity?
a) Consumers b)
Producers
c) Government d)
All of these
Answer: d) All of these
Q18. Good economic decisions
rely on:
a) Guesswork b) Data and analysis
c) Random choices d) Luck
Answer: b) Data and analysis
Q19. The Economic Survey of
India is prepared by:
a) Ministry of Home Affairs b)
Ministry of Finance
c) Ministry of Education d)
Reserve Bank of India
Answer: b) Ministry of Finance
Q20. The Economic Survey is
presented in Parliament:
a) After the Union Budget b) Before the Union Budget
c) During elections d) Every five years
Answer: b) Before the Union Budget
Q21. Which of these is NOT a
part of the scope of work of economists as given in the chapter?
a) Policy-making b)
Business consulting
c) Research and education d)
Sports coaching
Answer: d) Sports coaching
Q22. Advising investors on
where to invest falls under which scope of economists' work?
a) Policy-making b)
Finance
c) Research d) Business consulting
Answer: b) Finance
Q23. Guiding governments on
taxation or welfare spending is an example of:
a) Finance b) Policy-making
c) Business consulting d)
Research and education
Answer: b) Policy-making
Q24. The mismatch between
unlimited wants and limited resources gives rise to:
a) Inflation b) Scarcity
c) Employment d)
Trade
Answer: b) Scarcity
Q25. Scarcity leads to:
a) Choices b) Unlimited production
c) Zero demand d)
Free goods
Answer: a) Choices
Q26. How many key questions
does economics seek to address?
a) Two b) Three
c) Four d) Five
Answer: b) Three
Q27. Which is NOT one of the
three key questions in economics?
a) What to produce b) How to produce
c) For whom to produce d)
When to stop producing
Answer: d) When to stop producing
Q28. The question of 'what to
produce' concerns:
a) Which goods/services and in what quantities should be produced
b) Who owns the factory
c) How much tax to pay
d) Where to sell goods
Answer: a) Which goods/services
and in what quantities should be produced
Q29. Growing millets and
pulses instead of sugarcane promotes:
a) High profits only b) Water wastage
c) Sustainable agriculture d) Soil degradation
Answer: c) Sustainable agriculture
Q30. The question 'for whom to
produce' is decided based on:
a) Government orders only
b) Needs, income levels,
tastes, and lifestyles of consumers
c) Random selection
d) Weather conditions
Answer: b) Needs, income levels,
tastes, and lifestyles of consumers
Q31. School shoes are
typically:
a) Expensive and stylish b)
Simple, durable, and affordable
c) Made only of leather d)
Designed for athletes
Answer: b) Simple, durable, and
affordable
Q32. Office-wear shoes focus
on:
a) Comfort, formal appearance, and quality b)
Lightweight rubber soles
c) Low cost only d)
Sports performance
Answer: a) Comfort, formal appearance,
and quality
Q33. Sports shoes are designed
using:
a) Leather only b)
Special rubber soles and lightweight materials
c) Wood d)
Plastic only
Answer: b) Special rubber soles
and lightweight materials
Q34. The question 'how to
produce' relates to:
a) Which methods, resources, and technologies should be used
b) Who will consume the good
c) What price to charge
d) Which country to export to
Answer: a) Which methods,
resources, and technologies should be used
Q35. Production using more
workers and less machinery is called:
a) Capital-intensive b) Labour-intensive
c) Technology-intensive d)
Land-intensive
Answer: b) Labour-intensive
Q36. Production using more
machines and technology is called:
a) Labour-intensive b) Capital-intensive
c) Land-intensive d) Market-intensive
Answer: b) Capital-intensive
Q37. Agriculture and
handicrafts generally rely more on:
a) Capital b)
Labour
c) Technology only d) Imports
Answer: b) Labour
Q38. Steel and automobile
industries generally rely more on:
a) Labour b)
Machinery/Capital
c) Handicrafts d)
Barter system
Answer: b) Machinery/Capital
Q39. The choice of production
technique does NOT depend on:
a) Cost of capital b)
Nature of the product
c) Government laws and regulations d)
Colour of packaging
Answer: d) Colour of packaging
Q40. Customised or designer
clothes require:
a) Mass machine production b)
Skilled labour
c) No labour d) Only capital
Answer: b) Skilled labour
Q41. The system that defines
mechanisms for production, consumption, and distribution of goods and resources
is called:
a) Economic system b)
Political system
c) Legal system d)
Social system
Answer: a) Economic system
Q42. How many types of
economic systems are discussed in the chapter?
a) Two b) Three
c) Four d) Five
Answer: b) Three
Q43. In a planned economy,
major economic decisions are made by:
a) Private enterprises b)
A central planning authority of the government
c) Consumers directly d)
Foreign investors
Answer: b) A central planning
authority of the government
Q44. In a planned economy,
enterprises are regulated through:
a) Free competition b) Strict permits and licenses
c) Consumer votes d) Stock markets
Answer: b) Strict permits and
licenses
Q45. A drawback of the planned
economy is:
a) Too much competition b)
Little motivation to innovate or improve quality
c) Excess consumer choice d) No
government control
Answer: b) Little motivation to
innovate or improve quality
Q46. Which of the following is
an example of a planned economy?
a) USA b) Japan
c) Former Soviet Union d)
Singapore
Answer: c) Former Soviet Union
Q47. In a market economy,
questions of what, how, and how much to produce are addressed by:
a) The government alone b) Forces of demand and supply
c) A planning commission d) Religious institutions
Answer: b) Forces of demand and
supply
Q48. In a market economy, the
government's role is compared to:
a) A player b) A referee in a football match
c) A shopkeeper d)
A banker
Answer: b) A referee in a football
match
Q49. In a market economy,
ownership of factories and land largely rests with:
a) The government b) Individuals
and private companies
c) Foreign governments d)
Cooperative societies only
Answer: b) Individuals and private
companies
Q50. Which of the following is
an example of a market economy?
a) North Korea b)
Cuba
c) United States of America d)
Former Soviet Union
Answer: c) United States of
America
Q51. A mixed economy combines
features of:
a) Only planned economy b) Only market economy
c) Both market and planned economies d)
Neither system
Answer: c) Both market and planned
economies
Q52. Which of the following is
an example of a mixed economy?
a) North Korea b)
India (Post-1991)
c) Cuba d) Former Soviet Union
Answer: b) India (Post-1991)
Q53. In a mixed economy, the
government's role includes:
a) Fair competition rules and consumer protection
b) Complete ownership of all
industries
c) Banning all private enterprise
d) Fixing all prices
Answer: a) Fair competition rules
and consumer protection
Q54. In a mixed economy, the
market's role includes:
a) Providing only public goods
b) Profit-making businesses,
innovation, and competition
c) Only welfare programmes
d) Only law and order
Answer: b) Profit-making
businesses, innovation, and competition
Q55. Goods available to all
individuals without anyone being excluded are called:
a) Private goods b) Public goods
c) Luxury goods d)
Capital goods
Answer: b) Public goods
Q56. Which of the following is
an example of a public good?
a) A private car b)
Roads
c) A designer dress d) A smartphone
Answer: b) Roads
Q57. India followed a
state-led approach similar to a planned economy:
a) After 1991 b) In the decades after Independence
c) Only during British rule d)
Only in the 21st century
Answer: b) In the decades after
Independence
Q58. Major economic reforms in
India were introduced in:
a) 1947 b) 1991
c) 2000 d) 2020
Answer: b) 1991
Q59. The 1991 reforms in India
led to:
a) More government control
b) Reduced regulations and
encouraged private enterprise
c) Closing of the economy to global trade
d) Banning of private
companies
Answer: b) Reduced regulations and
encouraged private enterprise
Q60. After the 1991 reforms,
India shifted towards:
a) A pure planned economy b)
A more market-oriented mixed economy
c) A pure market economy d)
A barter economy
Answer: b) A more market-oriented
mixed economy
Q61. Which of the following
best explains the concept of scarcity?
a) Resources are unlimited b)
Resources are limited but wants are unlimited
c) Goods are always free d)
Production has no limits
Answer: b) Resources are limited
but wants are unlimited
Q62. Which of the following
best describes opportunity cost?
a) Cost of producing goods b)
Value of the next best alternative forgone
c) Market price of a product d)
Cost of labour only
Answer: b) Value of the next best
alternative forgone
Q63. The downward slope of the
Production Possibility Curve (PPC) indicates:
a) Unlimited resources b) Opportunity cost
c) Increasing population d)
Rising prices
Answer: b) Opportunity cost
Q64. Which of the following is
a feature of an efficient economy?
a) Resources remain idle b)
Resources are fully and efficiently utilised
c) Goods are wasted d)
Production is stopped
Answer: b) Resources are fully and
efficiently utilised
Q65. Which of the following is
an example of a human-made resource?
a) Forest b)
River
c) Machine d) Coal
Answer: c) Machine
Q66. Which of the following
best explains the need for making choices in economics?
a) Wants are limited b)
Resources are scarce
c) Resources are unlimited d)
Goods have no value
Answer: b) Resources are scarce
Q67. Which economic question
determines the target consumers of a product?
a) What to produce b)
How to produce
c) For whom to produce d)
Where to produce
Answer: c) For whom to produce
Q68. Which economic question
determines the production method?
a) What to produce b)
How to produce
c) For whom to produce d)
Where to sell
Answer: b) How to produce
Q69. Which economic question
determines the type and quantity of goods produced?
a) What to produce b)
How to produce
c) For whom to produce d)
Why to produce
Answer: a) What to produce
Q70. Which economic system
gives the greatest importance to demand and supply?
a) Planned economy b)
Market economy
c) Mixed economy d)
Traditional economy
Answer: b) Market economy
Q71. Which economic system
gives the greatest decision-making power to the government?
a) Market economy b)
Planned economy
c) Mixed economy d)
Traditional economy
Answer: b) Planned economy
Q72. Which economic system is
followed by most countries today?
a) Planned economy b)
Mixed economy
c) Barter economy d)
Traditional economy
Answer: b) Mixed economy
Q73. Which of the following is
NOT a public good?
a) Street lights b)
Public parks
c) Private car d)
Police services
Answer: c) Private car
Q74. Government intervention
in a mixed economy mainly aims to:
a) Eliminate all private businesses b)
Protect public welfare and regulate markets
c) Ban competition d) Control every industry completely
Answer: b) Protect public welfare
and regulate markets
Q75. Which production
technique generally creates more employment?
a) Capital-intensive b)
Labour-intensive
c) Automated production d)
Robotic production
Answer: b) Labour-intensive
Q76. Which production
technique is commonly used in automobile manufacturing?
a) Labour-intensive b)
Capital-intensive
c) Traditional farming d)
Cottage industry
Answer: b) Capital-intensive
Q77. Which of the following is
one of the major achievements of India's 1991 economic reforms?
a) Increased government control over all industries
b) Greater role for private
enterprises
c) End of foreign trade
d) Complete nationalisation of
industries
Answer: b) Greater role for
private enterprises
Q78. Which of the following is
a major benefit of competition in a market economy?
a) Higher prices b)
Better quality and innovation
c) Fewer choices d)
Reduced production
Answer: b) Better quality and
innovation
Q79. Which statement best
describes economics?
a) Study of unlimited resources
b) Study of efficient use of
scarce resources to satisfy unlimited wants
c) Study of only business profits
d) Study of only government
policies
Answer: b) Study of efficient use
of scarce resources to satisfy unlimited wants
Q80. Which statement best
summarises the chapter "Building Blocks in Economics: The Problem of
Choice"?
a) Resources are unlimited and choices are unnecessary
b) Scarcity requires choices,
and every choice involves opportunity cost
c) Governments alone solve all economic problems
d) Wants are limited and
resources are abundant
Answer: b) Scarcity requires
choices, and every choice involves opportunity cost
SECTION
B: SHORT ANSWER TYPE QUESTIONS
Q1.
Distinguish between needs and wants with examples. a) Needs are essentials
required Q1.
Distinguish between needs and wants with examples.
- Needs are essentials required for survival, such
as food, water, and shelter.
- Wants are non-essential desires that add
comfort or luxury, such as gadgets, vacations, and jewellery.
- Needs remain relatively constant, whereas
wants are unlimited and keep changing.
Q2. What are resources? Give
examples of natural and human-made resources.
- Resources are factors used for the production
of goods and services.
- Natural resources include water, coal, land,
and forests.
- Human-made resources include capital,
machines, money, and technology.
Q3. Explain the term
'opportunity cost' with an example.
- Opportunity cost is the value of the next best
alternative given up when a choice is made.
- When one option is chosen, the benefit of the
other option foregone is the opportunity cost.
- Example: If a farmer grows more barley, they
must grow less wheat.
Q4. What is a Production
Possibility Curve (PPC)? Mention any two features.
- PPC shows different combinations of two goods
produced using all available resources.
- It is downward sloping.
- Every point on the curve represents efficient
use of resources.
Q5. Why does the PPC slope
downward?
- Resources are limited.
- Producing more of one good requires
sacrificing another.
- This trade-off represents opportunity cost.
Q6. Explain the meaning and
origin of the word 'Economics'.
- Economics comes from the Greek word "Oikonomia."
- Oikos means household.
- Nemein means management.
- Thus, economics means household management.
Q7. What does the discipline
of Economics deal with?
- It studies the optimum use of scarce
resources.
- It explains interactions among consumers,
producers, governments, and financial institutions.
- It studies wages, prices, employment, and
trade.
Q8. Why are data and analysis
important for good economic decisions?
- Good decisions are based on facts and data.
- Families use data for budgeting.
- Governments and businesses use data for
planning.
Q9. What is the Economic
Survey of India? Mention its significance.
- It is an annual document prepared by the
Ministry of Finance.
- It is presented before the Union Budget.
- It reviews the economy and guides policy
decisions.
Q10. Describe any three areas
in the scope of work of economists.
- Policy-making.
- Business consulting.
- Finance and investment advice.
Q11. How does scarcity lead to
the problem of choice?
- Human wants are unlimited.
- Resources are scarce.
- Scarcity forces people to make choices.
- Every choice has an opportunity cost.
Q12. What are the three key
questions that economics seeks to address?
- What to produce?
- How to produce?
- For whom to produce?
Q13. Explain the question
'What to produce' with the example of crops.
- Farmers choose between sugarcane/paddy and
millets/pulses.
- Sugarcane gives higher profit but uses more
water.
- This reflects trade-off and opportunity cost.
Q14. Explain the question 'For
whom to produce' with the example of shoes.
- School shoes are made for students.
- Office shoes are made for professionals.
- Sports shoes are made for athletes.
- Casual shoes are made for daily users.
Q15. Explain the question 'How
to produce' with suitable examples.
- It concerns production methods.
- Labour-intensive production uses more workers.
- Capital-intensive production uses more
machines.
Q16. What factors determine
the choice of production technique used by a producer?
- Cost of capital.
- Availability of technology.
- Nature of the product.
- Cost and availability of labour.
- Government regulations.
Q17. Define an economic
system. Name its three types.
- An economic system determines production,
consumption, and distribution.
- It answers the three basic economic questions.
- Types: Planned Economy, Market Economy, Mixed
Economy.
Q18. Describe the main
features of a planned economy.
- Government makes major economic decisions.
- Government owns most resources.
- Heavy regulation through permits and licences.
- Limited competition and innovation.
Q19. Describe the main
features of a market economy.
- Demand and supply determine production.
- Private ownership of resources.
- Government maintains law and order.
- Competition improves quality and innovation.
Q20. Describe the main
features of a mixed economy.
- Combination of planned and market economies.
- Government and private sector both
participate.
- Government regulates and provides public
goods.
Q21. What are public goods?
Give examples.
- Public goods are available to everyone.
- One person's use does not reduce others' use.
- Examples: Roads, parks, street lights, police
services, basic education.
Q22. Why is a planned economy
said to restrict innovation?
- Heavy government regulation.
- Limited competition.
- Less motivation to improve products.
Q23. Why is competition
important in a market economy?
- Improves quality.
- Reduces prices.
- Encourages innovation.
Q24. Describe India's economic
system in the decades after Independence.
- India followed a planned economy.
- Government controlled major industries.
- Production was regulated through licences.
Q25. What led to India's
economic reforms of 1991? What did they achieve?
- India faced an economic crisis.
- Government reduced regulation.
- Private enterprise was encouraged.
- Economy opened to global trade.
Q26. Differentiate between
labour-intensive and capital-intensive production.
Labour-intensive
- More workers.
- Less machinery.
- Example: Agriculture and handicrafts.
Capital-intensive
- More machinery.
- Less labour.
- Example: Steel and automobile industries.
Q27. Explain why 'For whom to
produce' also affects the materials used in production.
- Leather shoes target high-income customers.
- Rubber or synthetic shoes are more affordable.
- Producers study consumer demand before
choosing materials.
Q28. What role does the
government play in a market economy despite limited intervention?
- Maintains law and order.
- Provides infrastructure.
- Provides public goods.
- Regulates the economy.
Q29. Explain how the PPC helps
enterprises and governments.
- Shows maximum possible production.
- Explains opportunity cost.
- Helps in efficient resource allocation.
Q30. "Almost all
economies in the world are mixed economies." Justify this statement.
- Most economies have both private ownership and
government involvement.
- Even market economies have government
regulation.
- Examples: India, China, Germany, Sweden, USA,
Singapore.
SECTION
C: LONG ANSWER TYPE QUESTIONS
Q1. Are human wants limited or
unlimited? Support your answer with examples.
- Needs are essentials for survival such as
food, water, shelter, medicines, and school supplies.
- Wants are non-essential desires like gadgets,
vacations, and jewellery.
- Human wants are unlimited because new wants
arise as income, lifestyle, and technology change.
- Example: A person upgrades from a bicycle to a
motorbike and later to a car.
- Since resources are limited, choices must be
made.
Q2. What is meant by 'scarcity
of resources'? Explain how it leads to the problem of choice using suitable
examples.
- Resources are limited in quantity.
- Resources have alternative uses.
- Unlimited wants and scarce resources force
people to make choices.
- Example: A farmer decides how much barley and
wheat to grow.
- This leads to opportunity cost and the three
economic questions.
Q3. What is opportunity cost?
Explain with the help of the farmer's barley–wheat example and describe how it
is represented graphically.
- Opportunity cost is the value of the next best
alternative forgone.
- A farmer can grow either barley or wheat using
limited resources.
- Producing more barley means sacrificing wheat.
- Different production combinations show
possible outputs.
- These combinations form a downward-sloping
PPC.
Q4. Describe the Production
Possibility Curve (PPC) in detail. What does it represent, and why is it useful
for enterprises and governments?
- PPC shows different combinations of two goods.
- It is obtained by plotting production
combinations.
- It slopes downward because of opportunity
cost.
- Every point shows efficient use of resources.
- It helps in planning and resource allocation.
Q5. Trace the origin of the
word 'Economics' and explain in detail what the discipline of economics deals
with.
- Economics comes from the Greek word Oikonomia.
- Oikos means household and Nemein means
management.
- It means household management.
- Economics studies optimum use of scarce
resources.
- It studies consumers, producers, governments,
prices, wages, investment and trade.
Q6. "Good economic
decisions rely on data and analysis, not guesswork." Explain this
statement with examples.
- Families use data for budgeting.
- Governments use data for taxation and welfare
planning.
- Businesses study market trends.
- Economists analyse surveys and financial
reports.
- Data helps make informed decisions.
Q7. What is the Economic
Survey of India? Explain its features and importance in the Indian economy.
- Annual document prepared by the Ministry of
Finance.
- Presented before the Union Budget.
- Reviews the economy's performance.
- Discusses future opportunities and challenges.
- Helps policymakers and citizens.
Q8. Describe the scope of work
of economists, giving examples of each area.
- Policy-making.
- Business consulting.
- Research and education.
- Finance and investment.
- Economists use data for decision-making.
Q9. Explain the three key
questions in economics with suitable examples for each.
- What to produce?
- How to produce?
- For whom to produce?
- These arise because resources are scarce.
- They help allocate resources efficiently.
Q10. Explain the question
'What to produce' in detail using the example of crop selection by farmers.
- Decides which goods and services should be
produced.
- Farmers choose between sugarcane/paddy and
millets/pulses.
- Sugarcane gives higher profits.
- Millets save water and improve soil.
- Shows trade-off and opportunity cost.
Q11. Explain the question 'For
whom to produce' with reference to the example of shoes.
- Decides who will use the goods.
- Producers consider income and lifestyle.
- School shoes for students.
- Office shoes for professionals.
- Sports and casual shoes for different users.
Q12. Explain the question 'How
to produce', and describe the factors that determine the choice of production
technique.
- Decides production methods.
- Labour-intensive production.
- Capital-intensive production.
- Depends on technology, labour and capital
costs.
- Government policies also influence production.
Q13. Define an economic
system. Describe the three types of economic systems.
- Economic system manages production, consumption
and distribution.
- Planned economy.
- Market economy.
- Mixed economy.
- Most countries have mixed economies.
Q14. Describe the features,
advantages and limitations of a planned economy with examples.
- Government makes all major decisions.
- Government owns most resources.
- Heavy regulation through licences.
- Competition and innovation are limited.
- Examples: Former Soviet Union, North Korea and
Cuba.
Q15. Describe the features and
working of a market economy with examples.
- Demand and supply determine production.
- Private ownership.
- Government acts as a referee.
- Competition improves quality and innovation.
- Examples: USA, Japan and Hong Kong.
Q16. Describe the features of
a mixed economy. Why do most modern economies adopt this system?
- Combination of planned and market economy.
- Government and private sector both
participate.
- Government provides public goods and
regulation.
- Markets encourage profit and innovation.
- Balances growth with welfare.
Q17. Trace the evolution of
India's economic system from Independence to the present day.
- India initially followed a planned economy.
- Government controlled major industries.
- Licensing system regulated production.
- Economic reforms began in 1991.
- India became a market-oriented mixed economy.
Q18. Compare planned, market
and mixed economies on the basis of ownership, decision-making authority and
role of government.
- Ownership differs.
- Decision-making differs.
- Government role differs.
- Competition varies.
- Most countries follow mixed economies.
Q19. What are public goods?
Explain their importance in a mixed economy with examples.
- Available to everyone.
- One person's use doesn't reduce others' use.
- Examples: Roads, parks, police, street lights
and education.
- Government provides public goods.
- They improve public welfare.
Q20. Explain how the choice of
production technique is influenced by various factors using the example of a
garment manufacturer.
- Labour-intensive or capital-intensive methods.
- Cost of machinery.
- Technology available.
- Nature of the product.
- Labour cost and government policies.
Q21. Explain with examples how
producers decide 'For whom to produce', taking into account income levels and
materials used.
- Different consumers have different needs.
- Leather shoes for higher-income customers.
- Rubber shoes for affordable markets.
- Producers study consumer demand.
- Resources are used efficiently.
Q22. Discuss the relationship
between scarcity, choice and opportunity cost as the foundation of economics.
- Resources are scarce.
- Wants are unlimited.
- Scarcity leads to choice.
- Every choice has opportunity cost.
- Forms the basis of economics.
Q23. "Different economic
systems provide different ways of answering the three key questions."
Explain.
- Planned economy—government decides.
- Market economy—demand and supply decide.
- Mixed economy—government and market both
decide.
- Answers differ according to the system.
- Resources are organised differently.
Q24. Explain why pure economic
systems rarely exist in the real world.
- Planned economies reduce competition.
- Market economies may ignore public welfare.
- Governments intervene even in market
economies.
- Planned economies also allow some private
ownership.
- Therefore, mixed economies are most common.
Q25. Describe the factors of
production and explain how they are used differently across various economic
activities.
- Land.
- Labour.
- Capital.
- Technology.
- Different industries use these factors
differently.
Q26. Explain the importance of
the Economic Survey of India for policymakers and citizens.
- Prepared annually by the Ministry of Finance.
- Reviews economic performance.
- Discusses future challenges.
- Guides the Union Budget.
- Helps citizens understand the economy.
Q27. "Human wants keep
changing, creating both opportunities and challenges for the economy and
environment." Discuss.
- Wants are unlimited.
- Creates business opportunities.
- Increases pressure on natural resources.
- May cause environmental degradation.
- Sustainable development is necessary.
Q28. Discuss how the concept
of opportunity cost is useful in real-life decision-making.
- Helps individuals make better choices.
- Helps farmers allocate land.
- Helps businesses choose production methods.
- Helps governments allocate budgets.
- Ensures efficient use of resources.
Q29. Explain the significance
of competition in driving quality and innovation, comparing planned and market
economies.
- Competition improves quality.
- Encourages innovation.
- Planned economies have limited competition.
- Market economies encourage better products.
- Consumers benefit from competition.
Q30. Summarise the key
learnings of the chapter "Building Blocks in Economics: The Problem of
Choice."
- Economics deals with scarce resources and
unlimited wants.
- Every choice has an opportunity cost.
- Three key economic questions guide production.
- Different economic systems answer these
questions differently.
- Most countries, including India, follow a
mixed economy.
SECTION
D: ASSERTION-REASON BASED QUESTIONS
Instructions: Each question consists of two
statements — Assertion (A) and Reason (R). Choose the correct option:
- a) Both A and R are true, and R is the correct
explanation of A.
- b) Both A and R are true, but R is NOT the
correct explanation of A.
- c) A is true, but R is false.
- d) A is false, but R is true.
Q1.
Assertion (A): Human wants are unlimited and keep
changing.
Reason (R): As people fulfil one want, new
wants arise due to changing lifestyle and income levels.
Answer: Both A and R are true, and R is the
correct explanation of A.
Q2.
Assertion (A): Resources are limited in quantity.
Reason (R): Resources can only be put to a
single fixed use.
Answer: A is true, but R is false.
Q3.
Assertion (A): Opportunity cost is the value of
the next best alternative given up.
Reason (R): When a farmer grows more barley,
they must grow less wheat on the same land.
Answer: Both A and R are true, and R is the
correct explanation of A.
Q4.
Assertion (A): The Production Possibility Curve
slopes downward.
Reason (R): Producing more of one good requires
giving up some production of the other good due to limited resources.
Answer: Both A and R are true, and R is the
correct explanation of A.
Q5.
Assertion (A): Points on the PPC represent wastage
of resources.
Reason (R): All points on the PPC show maximum
output achievable through efficient use of resources.
Answer: A is false, but R is true.
Q6.
Assertion (A): Economics is derived from the Greek
words meaning 'household management'.
Reason (R): Nations, like households, must plan
how to use limited resources efficiently.
Answer: Both A and R are true, and R is the
correct explanation of A.
Q7.
Assertion (A): Good economic decisions rely purely
on guesswork.
Reason (R): Data and analysis are essential
tools used by economists, governments, and enterprises.
Answer: A is false, but R is true.
Q8.
Assertion (A): The Economic Survey of India is
presented after the Union Budget.
Reason (R): It reviews the economy's
performance and acts as a blueprint for the upcoming Union Budget.
Answer: A is false, but R is true.
Q9.
Assertion (A): Scarcity of resources relative to
unlimited wants gives rise to the problem of choice.
Reason (R): Scarcity forces individuals,
enterprises, and governments to decide how best to allocate resources.
Answer: Both A and R are true, and R is the
correct explanation of A.
Q10.
Assertion (A): 'What to produce' only concerns the
type of goods produced, not the quantity.
Reason (R): This question concerns both which
goods/services and in what quantities they should be produced.
Answer: A is false, but R is true.
Q11.
Assertion (A): Producing sugarcane has an
opportunity cost of forgone gains from saved water and improved soil health.
Reason (R): Sugarcane is a water-intensive
crop, whereas millets and pulses are drought-resistant.
Answer: Both A and R are true, and R is the
correct explanation of A.
Q12.
Assertion (A): School shoes and office-wear shoes
are designed identically.
Reason (R): Producers decide which consumer
group to serve based on needs, income levels, and lifestyles.
Answer: A is false, but R is true.
Q13.
Assertion (A): Labour-intensive production uses
more machinery and less manpower.
Reason (R): Agriculture and handicrafts
generally rely more on labour than machinery.
Answer: A is false, but R is true.
Q14.
Assertion (A): The choice between labour-intensive
and capital-intensive production depends only on government laws.
Reason (R): Cost of capital, availability of
technology, and nature of the product also influence this choice.
Answer: A is false, but R is true.
Q15.
Assertion (A): In a planned economy, the central
government makes all major economic decisions.
Reason (R): The government owns most resources
and sectors like land, factories, banks, and transport in a planned economy.
Answer: Both A and R are true, and R is the
correct explanation of A.
Q16.
Assertion (A): A planned economy encourages high
competition and innovation among enterprises.
Reason (R): Strict permits and licenses
restrict the number of enterprises that can operate in a planned economy.
Answer: A is false, but R is true.
Q17.
Assertion (A): In a market economy, the government
controls all prices and production decisions.
Reason (R): In a market economy, the government
acts like a referee, ensuring law and order without controlling prices.
Answer: A is false, but R is true.
Q18.
Assertion (A): A mixed economy combines features
of both market and planned economies.
Reason (R): In a mixed economy, both the
government and private enterprises play roles in economic decision-making.
Answer: Both A and R are true, and R is the
correct explanation of A.
Q19.
Assertion (A): Public goods can be used by one
person only, excluding all others.
Reason (R): Roads, parks, and street lights are
examples of public goods available to all without exclusion.
Answer: A is false, but R is true.
Q20.
Assertion (A): India's 1991 economic reforms
encouraged private enterprise and reduced excessive regulation.
Reason (R): These reforms shifted India towards
a more market-oriented mixed economy while retaining a government role.
Answer: Both A and R are true, and R is the
correct explanation of A.
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