Case Study Chapter 1 Introduction to Micro Economics

Please refer to Case Study Chapter 1 Introduction to Micro Economics with answers provided below. These case study based questions are expected to come in the upcoming Class 12 Economics examinations. We have provided economics case studies with answers class 12 for all chapters on our website as per the latest examination pattern issued by CBSE, NCERT, and KVS.

Chapter 1 Introduction to Micro Economics Economics Case study with Answers Class 12

Case Based Question:

Read the following case study and answer questions 

Economics is about how people make decisions given their limited resources. The decisions are taken with regard to the basic economic activities such as production and consumption of goods and services and saving and investment. However, taking decision is not easy or simple. One must estimate the wants and the availability of resources while taking decisions on production of goods and services. Similarly, distribution of the produced goods in the society needs to be done properly. The basic problems central to any economy, therefore, relate to production, consumption and distribution.

Question. Economics is always about making choice with given ……… .
(a) goods
(b) production
(c) investment
(d) resources

Question. Which of the following components impacts the production decision in an economy?
(a) Wants
(b) Availability of resources
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Question. The basic central problem of an economy is related to
(a) production
(b) consumption
(c) distribution
(d) All of these

Question. Unlimited human wants are the most dominant reason behind the economic problems. 
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Question. Assertion (A) The third economic problem is related to the economic activity of distribution. 
Reason (R) Government needs to decide the distribution of goods depending upon the economic situation of the population. Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation ofAssertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

Read the following case study and answer questions

Economists frequently distinguish between ‘positive’ and ‘normative’ economics. Positive economics is concerned with the development and testing of positive statements about the world that are objective and verifiable. Normative statements derive from an opinion or a point of view. Thus, the words ‘should’, ‘ought to’ or‘it is better to’ frequently occur. The validity of normative statements can never be tested. Positive statements, on the other hand, can be tested, at least in theory, if not always in practice. For anyone working at a management position, it is helpful to distinguish between positive and normative statements. Managers and the people they work with, or are advised by, are likely to make liberal use of both, although normative statements may sometimes be disguised as positive statements. Whilst both types of statement may deserve attention, better management decisions are likely to result when the  distinction between them is recognised. It is often possible to rephrase normative statements in such a way that they become positive ones. For example, the normative statement ‘‘the subsidies of the European Union’s Common Agricultural Policy (CAP)  should be removed’’ could be rephrased as the positive statement ‘‘removing CAP
subsidies will raise farm prices in developing countries’’. The validity of the latter statement could, in theory, be tested. 

Question. People working at management positions use both positive and normative statements due to which of the following reasons?
(a) It helps in understanding different situations that may prevail in the organisation
(b) It helps to deal with changing market conditions related to production
(c) It helps in understanding the impact of economics in the economy
(d) All of the above

Question. Assertion (A) Positive economics is concerned with the development and testing of positive statements. 
Reason (R) As the economy grows, validity of the facts becomes difficult with the same piece of information. Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

Question. ‘‘Removal of Common Agricultural Policies related to subsidies will raise farm prices in developing countries.’’ The above statement is a … economics.
(a) positive
(b) normative
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Question. The validity of normative science can ……… be tested using any statistical method.
(a) always
(b) never
(c) sometimes
(d) None of these

Question. Normative statements can be rephased to make it positive statement with any change in the actual purpose. 
(a) True
(b) False
(c) Partially true
(d) Incomplete statement

Read the following hypothetical text and answer the given questions:

In reality, all economies are mixed economies where some important decisions are taken by the government and the economic activities are by and large conducted through the market. The only difference is in terms of the extent of the role of the government in deciding the course of economic activities. In the United States of America, the role of the government is minimal. The closest example of a centrally planned economy is the China for the major part of the twentieth century. In India, since Independence, the government has played a major role in planning economic activities. However, the role of the government in the Indian economy has been reduced considerably in the last couple of decades.

Question. Economy may be classified as:
(a) Capitalist
(b) socialist
(c) mixed
(d) all of these 

Question. Whether the following statement is True or false:
“A centrally planned economy has been followed by India in the last two decades”.  

Question. Assertion(A): ‘Both, microeconomics and macroeconomics have same degree of aggregation’.
Reason(R): Micro economics involves limited degree of aggregation and Macroeconomics involves the highest degree of aggregation. Alternatives:
(a) Both Assertion(A) and Reason (R) are True and Reason(R) is the correct explanation of Assertion(A)
(b) Both Assertion(A) and Reason (R) are True and Reason(R) is not the correct explanation of Assertion(A)
(c) Assertion(A) is True but Reason(R) is False
(d) Assertion(A) is False but Reason(R) is True

Question. In the USA, the role of the government is minimal, due to:
(a) Capitalist economy
(b) socialist economy
(c) mixed economy
(d) all of these 

Question. Which economy has a co-existence of private and public sectors?
(a) Capitalist
(b) Mixed
(c) Socialist
(d) none of these 

Read the following hypothetical text and answer the given questions:

Each economy has scarce resources and will have possibility of being exhausted gradually after a continuous use. Growth of resources, therefore, become a basic problem of the economy. It can achieve this objective through technological advancement. Under-developed countries like India, Pakistan, Thailand etc. have remained poor because of poor growth of their resources. Besides fuller utilization of resources, these countries should try to raise their productive capacities, by exploring further availability of natural resources and discovering better techniques for their use. Moreover, full use of productive capacity is also indispensable for the growth of the economy. Since economic theory is classified into Micro and Macro Theory. Microeconomic theory deals with the allocation of resources in the market economy. In this theory, decisions regarding ‘what’, ‘how’ and ‘for whom’ to produce are decided on the basis of price mechanism. Goods are freely bought and sold in the market economy on an agreed price. Macroeconomic theory deals with the fuller and efficient use of resources. It also deals with the growth of resources and problems relating saving, investment, inflation, unemployment etc. Development economics deals with the problem of growth of resources.

Question. Macro Economics deals with the ……………………..
(a) Allocation of resources
(b) Aggregate use of resources
(c) both (a) & (b)
(d) none of these 

Question. Which is a central problem of an economy?
(a) Allocation of resources
(b) optimum utilisation of resources
(c) Economic development
(d) all of these

Question. Assertion(A): Lack of scarcity implies lack of economic problem.
Reason(R): Scarcity is the root cause of economic problem. Alternatives:
(a) Both Assertion(A) and Reason (R) are True and Reason(R) is the correct explanation of Assertion(A)
(b) Both Assertion(A) and Reason (R) are True and Reason(R) is not the correct explanation of Assertion(A)
(c) Assertion(A) is True but Reason(R) is False
(d) Assertion(A) is False but Reason(R) is True 

Question. What measures have been followed by India to raise its productive capacities by exploring:
(a) Technique
(b) Natural resources
(c) Discovering better technique
(d) all of these

Question. To which factor, economic problem is basically related to:
(a) Choice
(b) Consumer selection
(c) firm selection
(d) none of these

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