Class 9 Social Part 3B Economics Chapter 1 Basic Concepts of Economics
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Part III: (b) Economics
Basic Concepts of Economics
Lesson-Based Questions &Answers
Very Short Answer Type Questions
Q1. The word ‘economics’ has been derived from the word of language?
Ans: The word ‘economics’ has been derived from Greek.
Q2. The word ‘economics’ has been derived from which word?
Ans: The Greek word ‘oikonomia’.
Q3. Who is the father of economics?
Ans: Adam Smith is the father of economics.
Q4. Who has given the wealth-based definition of economics?
Ans: Adam Smith.
Q5. Who has given the welfare-based definition of economics?
Ans: Alfred Marshall.
Q6. Who has given the scarcity definition of economics?
Ans: The scarcity definition of economics is Lionel Robbins.
Q7. In which book and when did Adam Smith give his definition of economics?
Ans: In his book, ‘An Enquiry into the Nature and Causes of the Wealth of Nations’ published in 1776.
Q8. In which book and when did Alfred Marshall give his definition of economics?
Ans: In his book, ‘Principles of Economics’ published in 1890.
Q9. In which book and when did Lionel Robbins give his definition of economics?
Ans: In his book, ‘An Essay on the Nature and Significance of Economic Science.
Q10. Who said that the definition of economics given by Adam Smith is the ‘Gospel of the Mammon’?
Ans: Carlyle and Ruskin.
Q11. Who offered the definition of economics based on efficiency?
Ans: Adam Smith.
Q12. What is the power of a commodity to satisfy human wants called?
Ans: Utility.
Q13. What are the produced means of production called?
Ans: Capital is the produced means of production.
Q14. The words ‘micro’ and ‘macro’ have been derived from which words?
Ans: Micro Economics word is derived from Greek word Mikros, which means small. Macro Economics is derived from Greek word Makros, which means large.
Short Answer Type Questions
Q1. Write the definition of economics given by Adam Smith.
Ans: Adam Smith, who is considered as the father of economics, in his famous book, ‘An Enquiry into the Nature and Causes of the Wealth of Nations’ published in 1776, defined economics as ‘the science of wealth. This definition is considered as a wealth-based definition.
Smith’s definition was criticised by later social scientists like Carlyle andRuskin as being the ‘Gospel of the Mammon’. Wealth can never be the main aim of human life. It is only a means of achieving this. Too much emphasis on wealth would turn economics into a ‘dismal science’.
Q2. Write the definition of economics given by Marshall.
Ans: Cambridge economist, Alfred Marshall, in his book ‘Principles of Economics’ published in 1890, put forward a definition of economics based on the principles of welfare. According to him, Economics is the study of mankind in the ordinary business of life. It examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus, it is on the one side, a study of wealth and on the other, and more important side, a part of the study of man.
Marshall’s definition is an improvement on Smith’s definition, How-ever, Marshall’s definition did not earn the distinction of being the acceptable definition of economics. This is because Marshall only mentioned about the welfare derived from material goods. Welfare derived from non-material services, such as those of a teacher or doctor where not mentioned by him. Moreover, all goods may not bring about welfare of the people. For example, use ofalcohol, drugs, cigarettes do not lead to the increase in the welfare of man.
But economics deals with the study of the production, consumption and distribution of such products.
Q3. Write the definition of economics given by Robbins.
Ans: Economist Lionel Robbins, in his book, ‘An Essay on the Nature and Significance of Economic Science’ published in 1932, put forward the most acceptable definition of economics. According to him, ‘Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. This definition highlights three main points-(i) Human wants are unlimited, (ii) Resources to satisfy human wants are limited, (iii) Scarce resources have alternative uses.
These three points give rise to economic problems or problems of choice. The problem of deciding which want among the unlimited wants is to be fulfilled by using the scarce resources with alternative uses is called economic problem or problem of choice. Robbins’ definition is also called thedefinition of scarcity. Robbins’ definition is also not above criticism. According to the critics, the problem of attaining present economic betterment ismore important than the problem of choices. But Robbins is silent on this point.
Q4. Write the definition of economics given by Samuelson and Nordhaus.
Ans: According to economist Samuelson and Nordhaus, the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.
Q5. What are the basic concepts of the definition of economics given by Robbins?
Ans: The basic concepts of the definition of economics given by Robbins are:
1. Human wants are unlimited
2. Resources to satisfy human wants are limited
3. Scarce resources have alternative uses.
Q6. What is microeconomics?
Ans: Microeconomics is the study of individuals, households and firms’behaviour in decision making and allocation of resources. It generally applies to markets of goods and services and deals with individual and economic issues. The term ‘microeconomics’ is originated from the Greek prefix ‘mikros ’, which means ‘small’.
Q7. What is macroeconomics?
Ans: The term ‘macroeconomics’ is originated from the Greek prefix‘makros’ which means ‘large’. Macroeconomics is a branch of economics that deals with the performance, structure, behaviour, and decision-making ofan economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output/GDP (Gross Domestic Product) and national income, unemployment (including unemployment rates), price indices and inflation, consumption, saving, investment, energy, international trade, and international finance.
Q8. Show the difference between free goods and economic goods.
Ans: The difference between free goods and economic goods are:
Free Goods:
1. These goods are limited in supply.
2. These goods do not command any price. These are available free of cost.
3. These are free gifts of nature.
4. No such resources are required in their production.
Economic Goods:
1. These goods are available in abundant amount..
2. These goods command price. To obtain such goods one has to pay price.
4. Scarce resources are used to produce such goods.
3. Economic goods are man-made.
Q9. What is national income?
Ans: National income is the sum total of the value of all the goods and services manufactured by the residents of the country, in a year., within its domestic boundaries or outside. It is the net amount of income of the citizens by production in a year.
Q10. What is per capita income?
Ans: Per capita income is a measure of the amount of money earned per person in a nation or geographic region. Per capita income is used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population.
In other words, Per capita income =Total income of a region ÷ Total population Example: If a country’s total income is $1,000,000 and its population is 1,000, then Per capita income = 1,000,000 ÷ 1,000 = $1,000 per person
Essay Type Question-Answers
Q1. Explain with examples, the importance of studying economics.
Ans: Economics equips analysts with tools to evaluate the costs, benefits, and consequences of government policies in areas such as healthcare and education, thereby supporting decisions that promote stable growth and overall social well-being.
(i) The study of economics is highly important because it examines not only the production, distribution, and consumption of wealth but also the effective use of human resources.
(ii) It provides a realistic understanding of society, which is essential for its fundamental development.
(iii) Issues like inequality, poverty, resource scarcity, and inefficient resource utilization are critically analysed in economics, contributing to comprehensive socio-economic development.
There are several reasons why studying economics is necessary.
For example:
(i) A well-functioning democracy depends on an informed and aware citizenry.
(ii) Taxpayers naturally wish to understand how the government generates revenue.
(iii) They are also concerned with how this revenue is allocated and spent.
(iv) Additionally, they are interested in the rules governing public expenditure and whether funds are used efficiently. A social reformer seeks to identify the causes of widespread poverty and often discovers that many of these causes are economic. Similarly, as informed consumers, individuals want to understand why the prices of essential goods rise. Questions related to globalisation, its advantages and disadvantages, economic development, and environmental economics all fall within the domain of economics.
Q2. Which definition of economics is the most acceptable and why? Explain.
Ans: The most widely accepted definition of economics was proposed by Lionel Robbins in his 1932 book An Essay on the Nature and Significance of Economic Science. He defined economics as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”
This definition emphasizes three key ideas:
(i) Human wants are unlimited.
(ii) Resources available to satisfy these wants are limited.
(iii) These limited resources have multiple alternative uses.
These conditions give rise to economic problems, commonly referred to as problems of choice. Since resources are scarce, individuals and societies must decide which wants to satisfy and how to allocate resources efficiently. For this reason, Robbins’ definition is also known as the “scarcity definition”of economics.
However, this definition has been criticised. Critics argue that achieving immediate economic welfare is more important than merely focusing on choice among scarce resources. Robbins’ definition does not adequately address this aspect.
Q3. Write about the scope of economics.
Ans: Economics deals with the problem of unlimited human wants in the face of limited resources. As a branch of social science, its scope has evolved alongside societal and civilisational changes, making it dynamic in nature.
The scope of economics generally includes the following areas:
(i) Consumption: Consumption refers to activities that satisfy human wants. It includes the study of consumer behaviour, utility, and consumer equilibrium.
(ii) Production: Production involves the creation of goods and services. Economics studies factors of production such as land, labour, capital, and organisation, along with production laws and producer equilibrium.
(iii) Distribution: Distribution examines how produced goods and services are allocated among individuals in society. It includes theories and principles ensuring fair and efficient distribution.
(iv) Exchange: Since no individual or nation can produce everything it needs, exchange becomes essential. Economics studies both domestic and international trade that facilitates this exchange.
(v) Money: The limitations of the barter system led to the development of money. Economics analyses the role, functions, and types of money, and how it simplifies exchange.
(vi) Income: This area covers the study of national income, per capita income, their distribution, and their relationship with economic welfare.
(vii) Public Finance: Public finance deals with government revenue, expenditure, and public debt, focusing on how public resources are managed.
(viii) Welfare Economics: Welfare economics examines how economic activities affect individual and social well-being. Economists like A. C. Pigou, Vilfredo Pareto, and Amartya Sen have significantly contributed to this field.
(ix) Economics of Environment: With industrialisation causing environmental imbalance, economics now includes environmental studies to find solutions for sustainable development and ecological stability.
(x) Efficiency: A central concern of economics is the efficient allocation and utilisation of scarce resources to maximise production and improve overall welfare. In the modern world, the scope of economics continues to expand. The inclusion of emerging areas such as global economics and sustainable development has further broadened its subject matter.
Additional Questions and Answers
1. In which Five-Year Plan of India was poverty eradication taken as the main objective?
Ans: In the Fifth Five-Year Plan.
2. Which group of people is most affected during inflation?
Ans: Fixed income earners.
3. Mention two causes of environmental degradation.
Ans: (a) Loss of biodiversity (b) Global warming.
4. According to the Tendulkar Committee, what percentage of people in Assam are below the poverty line?
Ans: 34.4 percent.
5. What is the name of the organization that conducts surveys on unemployment in India?
Ans: National Sample Survey Organisation.
6. Mention some problems arising from poverty.
Ans: (a) Food scarcity (b) Environmental degradation (c) Lack of housing(d) Migration (e) Social inequality.
7. “Think globally and act locally” — who said this should be the guiding principle of human thought and action?
Ans: Environmentalists.
8. Into how many categories can the causes of poverty be divided?
Ans: The causes of poverty can be divided into three categories: (a) Historical (b) Economic (c) Social.
9. Can social inequality be a cause of poverty?
Ans: Yes, it can.
10. Is it possible to eradicate poverty in the present world?
Ans: Yes, it is possible.
2. What is one of the main features of the Indian economy?
Ans: One of the main features of the Indian economy is that it is agriculture-based.
3. What percentage of the world’s population lives in India?
Ans: 17.5 percent.
4. Which state in India has the highest population density?
Ans: West Bengal, with 1029 persons per square kilometer.
5. Which state in India has the lowest population density?
Ans: Arunachal Pradesh, with only 17 persons per square kilometer.
6. What is inflation according to Karl Brunner?
Ans: According to Karl Brunner, “Inflation is a situation where more money is required to purchase fewer goods.”
Multiple Choice Questions (MCQs)
1. What is the primary subject matter of economics?
(a) Study of nature
(b) Study of wealth and human behaviour
(c) Study of politics
(d) Study of history
Ans: (b)
2. Who defined economics as a relationship between ends and scarce means?
(a) Adam Smith
(b) Alfred Marshall
(c) Lionel Robbins
(d) J.M. Keynes
Ans: (c)
3. What is the basic economic problem?
(a) Inflation
(b) Poverty
(c) Scarcity
(d) Unemployment
Ans: (c)
4. Which of the following is unlimited?
(a) Resources
(b) Human wants
(c) Capital
(d) Labour
Ans: (b)
5. Which of the following is a factor of production?
(a) Money
(b) Labour
(c) Demand
(d) Utility
Ans: (b)
6. What does production mean in economics?
(a) Consumption of goods
(b) Creation of goods and services
(c) Exchange of goods
(d) Distribution of goods
Ans: (b)
7. What is consumption?
(a) Creation of goods
(b) Use of goods and services
(c) Distribution of goods
(d) Exchange of goods
Ans: (b)
8. Which system existed before money?
(a) Banking system
(b) Barter system
(c) Credit system
(d) Trade system
Ans: (b)
9. What does distribution refer to?
(a) Production of goods
(b) Allocation of goods among people
(c) Exchange of goods
(d) Consumption of goods
Ans: (b)
10. Which branch deals with government revenue and expenditure?
(a) Microeconomics
(b) Macroeconomics
(c) Public Finance
(d) Welfare Economics
Ans: (c)
11. What is the meaning of scarcity?
(a) Excess supply
(b) Limited resources
(c) Unlimited wants
(d) High demand
Ans: (b)
12. Which of the following is related to welfare economics?
(a) Profit maximisation
(b) Social well-being
(c) Cost reduction
(d) Revenue generation
Ans: (b)
13. What is the function of money?
(a) Measure value
(b) Store value
(c) Medium of exchange
(d) All of these
Ans: (d)
14. Which of the following is a problem of choice?
(a) Abundance
(b) Scarcity
(c) Equality
(d) Stability
Ans: (b)
15. Which economist is associated with welfare economics?
(a) A.C. Pigou
(b) Adam Smith
(c) Karl Marx
(d) David Ricardo
Ans: (a)
16. What does exchange involve?
(a) Production only
(b) Trade of goods and services
(c) Consumption only
(d) Saving money
Ans: (b)
17. Which concept deals with environmental balance?
(a) Microeconomics
(b) Environmental economics
(c) Public finance
(d) Production theory
Ans: (b)
18. What is national income?
(a) Income of an individual
(b) Income of firms
(c) Total income of a country
(d) Government revenue
Ans: (c)
19. Which of the following is related to efficiency?
(a) Wastage of resources
(b) Proper use of resources
(c) Excess production
(d) Limited wants
Ans: (b)
20. What does economics mainly aim at?
(a) Maximising welfare
(b) Increasing population
(c) Reducing education
(d) Increasing inequality
Ans: (a)
21. Which of the following best explains Robbins’ concept of economics?
(a) Study of wealth only
(b) Study of human behaviour with unlimited resources
(c) Study of choice under scarcity
(d) Study of production only
Ans: (c)
22. What creates the problem of choice in economics?
(a) Unlimited resources
(b) Limited wants
(c) Scarce resources with alternative uses
(d) Equal distribution
Ans: (c)
23. Which of the following is NOT included in the scope of economics?
(a) Production
(b) Distribution
(c) Weather forecasting
(d) Consumption
Ans: (c)
24. Which economist criticised purely wealth-based definitions of economics?
(a) Alfred Marshall
(b) Adam Smith
(c) Lionel Robbins
(d) Pigou
Ans: (a)
25. What is the main objective of public finance?
(a) Profit maximisation
(b) Resource allocation and income distribution
(c) Private wealth creation
(d) Consumption increase
Ans: (b)
26. Which of the following indicates economic efficiency?
(a) Maximum wastage
(b) Minimum production
(c) Optimal use of resources
(d) Unlimited consumption
Ans: (c)
27. What is the key concern of environmental economics?
(a) Trade policies
(b) Industrial profits
(c) Environmental sustainability
(d) Consumption patterns
Ans: (c)
28. Which situation reflects an economic problem?
(a) Unlimited supply of goods
(b) No human wants
(c) Limited resources and multiple wants
(d) Equal income distribution
Ans: (c)
29. Which of the following best describes welfare economics?
(a) Study of profits
(b) Study of costs
(c) Study of social welfare and well-being
(d) Study of markets only
Ans: (c)
30. Which of the following is a dynamic feature of economics?
(a) Fixed scope
(b) Unchanging concepts
(c) Expanding subject matter over time
(d) Limited application
Ans: (c)
