Economics 2 Marks Question

1. What to produce: The first problem that an economy faces is to decide which goods and services are to be produced. Besides this, the economy also needs to decide in what quantities these goods and services should be produced
2. How to produce:It is concerning with, how to organise production. This problem is related to the choice of technique of production. It arises due to the availability of various techniques for the production of a commodity such as labour intensive technique and capital intensive technique. Depending upon the availability of resources, either technique is used.
3. For whom to produce:This economic problem basically focuses on the distribution mix of the final goods and services produced. The distribution of the final goods and services is equivalent to the distribution of National Income (or National Product) among the factors of production such as land, labour, capital and entrepreneur.

1. Limited resources

Resources, ie. land, labour, capital, etc. are available in limited quantities in an economy and cannot produce all what people want.

2. Unlimited wants

Wants of the people are unlimited and keep on multiplying and cannot be satisfied due to limited resources.

3. Resources have alternative uses

A resource can be used for producing more than one product. This creates a problem. Which product should be produced or which want should be satisfied first.

1. Demand by a consumer.
2. Price determination of a commodity.

Alternate Answer

Advancement of technology.

1. Households.

4. All of these.

4. All of these.

1. Personal consumption (like bread purchased by consumer household).
2. Investment or capital formation (like building, machinery purchased by a firm).

1. Further processing (like sugar used for making sweets).
2. Resale in the same year (If car purchased by a car dealer for resale).

1. Private ownership of land and capital.
2. Profit is the only motive.
3. Free play of the market forces of demand and supply.
4. Government looks after growth, stability and social justice in the economy.

1. Without any exchange of goods and services.

1. Population of a country is an example of stock as it is measured at a point of time.
2. Number of births is an example of flow as it is measured per unit of time.

4. Can be Consumption goods and intermediate goods.

1. Final consumer goods.
2. Final producer goods.

Explanation:

Microeconomics and Macroeconomics are not independent of each other and there is much common ground between the two. It means Microeconomics and Macroeconomics are interdependent.

Explanation:

The main tools of macroeconomics are aggregate demand and aggregate supply.

Eaplanation:

As macroeconomics is that part of economics theory which study the economy as a whole.

1. If a machine is purchased by a household, then it is a final good. For example, washing machine purchased by a consumer household is a final goods.
2. If it is purchased by a firm for its own use, then it is also a final good. For example, refrigerator purchased by a firm.
3. If it is bought by a firm for resale, then it is an intermediate good. For example, machine purchased by a machine dealer.

1. If a sewing machine is purchased by a tailor, then it is a fixed asset of the tailor and considered to be a capital good. But the same machine purchased by a consumer household is considered to be a durable use consumer goods.
2. If a car purchased by a taxi driver as a taxi or if purchased by a firm for use in its business is a capital good. But the same car purchased by a consumer household is a durable use consumer goods.

4. All of them.

1. Price determination of a commodity.
2. The study of producer's equilibrium or consumer's equilibrium.

1. National income.
2. Level of employment.
3. Aggregate investment.
4. Aggregate consumption.

1. Theory of multiplier employment.
2. Income generation.

2. Real flow.

1. Single-use Producer Goods: Goods used as raw material by the producers. It includes raw material like coal, wood, etc. They are not capital goods as they cannot be repeatedly used in the production process.
2. Capital Goods: Goods which are used as fixed assets by the producers, like plant and machinery, which can be repeatedly used in the production process. So, it can be said that all capital goods are producer goods, but all producer goods are not capital goods.