PADVIKSHA BLOG
Part — A
Choose the best options
Question 1. In Economics, we make use of
(a) Deductive Method
(b) Inductive Method
(c) Both
(d) None
Answer (c) Both
Question 2. Adam Smith wrote 'Wealth of Nations" in
(a) 1723
(b) 1890
(c) 1776
(d) 1932
Answer (c) 1776
Question 3. Who wrote the book "Principles of
Economics" in 1890?
(a) Adam Smith
(b) Alfred Marshall
(c) Lionel Robbins
(d) Samuelson
Answer (b) Alfred Marshall
Question 4. Lionel) Robbins book. An essay on the nature and
significance of economic science" was published in
(a) 1932
(b) 1776
(c) 1723
(d) 1890
Answer (a) 1932
Question 5. Production refers to the creation of
(a) Price
(b) Market
(c) Cost
(d) Utilities
Answer (d) Utilities
Question 6. ______is the unit of measurement of utility.
(a) Price
(b) Utils
(c) Consumption
(d) Human wants
Answer (b) Utils
PADVIKSHA BLOG
Question 7. Perishable goods are
(a) Long Term Lived
(b) Short Term Lived
(c) Medium Term Lived
(d) Longer Life Time Lived
Answer (b) Short Term Lived
Question 8. "The proportion of total expenditure
incurred on food items declines as total expenditure goes on increasing"
is
(a) Marshall's law
(b) Adam Smith's law
(c) Engel's law
(d) Samuelson's law
Answer (c) Engel's law
Question 9. ____________ the economy is the other name for
economics.
(a) Wealth
(b) Welfare
(c) Scarcity
(d) Political
Answer (d) Political
Question 10. Utility can be measured indirectly using the
'Measuring rod of money' is the statement of
(a) Adam Smith
(b) Samuelson
(c) Marshall
(d) Lionel Robbins
Answer: (c) Marshall
Part — B
Answer the following questions in one or two sentences
Question 1. What is scarcity?
Answer. Scarcity is the gap between what people want and
what they are able to get.
Question 2. Define normative economics?
Answer
1. Inflation is better than deflation.
2. More production of luxury goods is not good for a
less-developed country.
3. Inequalities in the distribution of wealth and incomes
should be reduced.
Question 3. Explain Value.
Answer. Value is the power of a commodity to command other
commodities in exchange.
Question 4. What is Income?
Answer Income is the amount of monetary or other returns,
either earned or unearned, accruing over a period of time.
Question 5. Give the meaning of the Inductive method.
Answer Induction is a process in logic facilitative or
arriving at an inference, moving from particular to the general.
Question 6. What are the kinds of goods? Answer
1. Consumer goods
2. Capital goods
3. Perishable goods
4. Durable goods
Part — C Answer the following questions in One Paragraph
Question 1. What are the four definitions of economics?
Answer. Based on the particular stage of the growth of the
subject of economics, the four definitions are presented here.
1. Smith's wealth definition, representing the classical
era.
2. Marshall's welfare definition, representing the
Neo-classical era.
3. Robbin's scarcity definition representing the new age.
4. Samuelson's growth definition representing the modern
age.
Question 2. Explain the steps of the deductive method?
Answer. Steps of deductive method:
• Step 1: The analyst must have a clear and precise idea of
the problem to be inquired into.
• Step 2: The analyst clearly defines the technical terms
used in the analysis. Further, assumptions of the theory are to be precise.
• Step 3: Deduce hypothesis from the assumptions taken.
• Step 4: Hypotheses should be verified through direct
observation of events in the real world and through statistical methods. [e.g.]
There exists an inverse relationship between price and quantity demanded of a
good.
Question 3. Whether economics is an art or science? Explain.
Answer
1. Economics as an
art: Art is the practical application of knowledge for achieving particular
goals. Economics provides guidance to the solutions to all the economic
problems. A.C. Pigou, Alfred Marshall and others regard economics as an art.
2. Economics as a science : Science is a systematic study of
knowledge. Science develops the co-relation between cause and effect based on
fads. Economics examines the relationship between the cause and effect of the
problems. Hence, it is rightly considered as both an art and a science.
Question 4. State the importance of microeconomics.
Answer
1. To understand the operation of an economy.
2. To provide tools for economic policies.
3. To examine the condition of economic welfare.
4. Efficient utilization of resources.
5. Useful in international trade.
6. Useful in decision making.
7. Optimal resource allocation.
8. The basis for prediction.
9. Price determination.
Question 5. What are the methods of economic analysis?
Answer. There are two types of methods used in economics.
i. Deductive Method:
1. It is also named as analytical or abstract method.
2. It is a process in logic facilitating or arriving at an
inference, moving from general to particular.
3. It consists in deriving conclusions from general truths.
ii. Inductive method:
Inductive method is also called as empirical method. It
involves the process of reasoning from particular fads to general principle. In
this method, economic generalizations are derived based on
1. Experimentations
2. Observations
3. Statistical methods
Alfred Marshall has rightly remarked "Inductive and
Deductive methods are both needed for scientific thought as the right and left
foot are both needed for walking"