Class 12 Microeconomics Sandeep Garg Solutions Chapter 1 – Introduction to Microeconomics
FAQs on Chapter 1 Solutions for Class 12 Microeconomics by Sandeep Garg
1. According to the solutions for Chapter 1 of Sandeep Garg's Class 12 Microeconomics, what is the correct way to differentiate between microeconomics and macroeconomics for exams?
To correctly differentiate between microeconomics and macroeconomics as per the CBSE 2025-26 pattern, the solutions suggest highlighting the following key distinctions:
- Scope: Microeconomics studies economic problems at an individual level (a consumer, a firm), while macroeconomics studies the economy as a whole (national income, aggregate demand).
- Objective: The main aim of microeconomics is to determine the price of a commodity or factors of production. Macroeconomics aims to determine the aggregate income and employment level of the economy.
- Tools: The primary tools for microeconomics are individual demand and supply. For macroeconomics, the tools are aggregate demand and aggregate supply.
- Example: An individual's income is a microeconomic concept, whereas the national income is a macroeconomic concept.
2. How do the solutions for Sandeep Garg's Chapter 1 guide students to solve questions distinguishing between positive and normative economics with examples?
The solutions guide students to first define each term clearly and then provide a contrasting example. The correct method is:
- Positive Economics: Explain that it deals with what is or how an economic problem is actually solved. These are factual statements that can be verified with data. For example, 'India's population is over 1.4 billion' is a positive statement.
- Normative Economics: Explain that it deals with what ought to be or how an economic problem should be solved. These are value judgements or opinions and cannot be verified. For example, 'The government should implement policies to control population growth' is a normative statement.
3. Why is the 'choice' of what, how, and for whom to produce considered the fundamental economic problem? How do the step-by-step solutions for Chapter 1 address this?
The problem of 'choice' is fundamental because of two key factors: unlimited human wants and scarce economic resources with alternative uses. The solutions for Chapter 1 explain this systematically:
- What to Produce: An economy must choose which goods and services to produce (e.g., consumer goods or capital goods) and in what quantities, as it cannot produce everything.
- How to Produce: It must decide on the production technique, whether to use labour-intensive or capital-intensive methods.
- For Whom to Produce: It must decide how the national product will be distributed among the population, which relates to the distribution of income.
This problem of choice, arising from scarcity, is the root cause of all economic activity.
4. What is the economic reasoning behind the concave shape of a Production Possibility Frontier (PPF)? How do the solved exercises in Sandeep Garg's Chapter 1 explain this?
The solved exercises explain that the Production Possibility Frontier (PPF) is concave to the origin because of increasing Marginal Opportunity Cost (MOC), also known as the Marginal Rate of Transformation (MRT). The reasoning is as follows:
- Resources (like land, labour, capital) are not equally efficient in the production of all goods.
- When an economy shifts resources from producing one good (e.g., Good Y) to another (e.g., Good X), it initially moves the resources best suited for Good X.
- As production of Good X increases further, resources that are less efficient in producing it must be transferred. This means to produce each additional unit of Good X, a greater quantity of Good Y must be sacrificed.
- This increasing rate of sacrifice (opportunity cost) gives the PPF its characteristic concave shape.
5. What is the correct method for explaining the concept of 'opportunity cost' with a suitable example, as outlined in the solutions for Class 12 Microeconomics Chapter 1 by Sandeep Garg?
The correct method is to first define the concept and then provide a clear, simple example. The solutions define opportunity cost as the value of the next best alternative foregone when making a choice. For example, if a piece of land can be used to grow either wheat (worth Rs. 50,000) or rice (worth Rs. 40,000), and the farmer chooses to grow wheat, the opportunity cost of growing wheat is the Rs. 40,000 from the rice that was not grown.
6. What key points should be included when solving a question that asks to distinguish between a market economy and a centrally planned economy, based on the Chapter 1 solutions?
Based on the solutions, an answer should compare the two economies on the following key points:
- Ownership of Resources: In a market economy, resources are privately owned. In a centrally planned economy, they are owned by the state or government.
- Economic Decisions: Decisions in a market economy are driven by the motive of profit maximization. In a centrally planned economy, decisions are driven by the motive of social welfare.
- Guiding Force: The market economy is guided by the 'invisible hand' of market forces (demand and supply). The centrally planned economy is guided by a central planning authority.
- Role of Government: The government's role in a market economy is limited, mainly to law and order. In a centrally planned economy, the government has a comprehensive role in all economic activities.
7. How can the Production Possibility Frontier (PPF) be used to explain the central problems of an economy? What is the step-by-step approach given in the Sandeep Garg solutions for such questions?
The solutions explain that the PPF is a graphical tool that illustrates the central economic problems in the following way:
- What to Produce: Any point on the PPF curve represents a combination of two goods that an economy can produce. The society must choose one point on this curve, thus solving the problem of 'what to produce'.
- How to Produce: The PPF is drawn assuming that resources are used in the most efficient manner. Any point inside the curve signifies an inefficient use of resources, while any point on the curve signifies efficient production. This addresses the problem of 'how to produce' by highlighting the need for efficiency.
- Attainable and Unattainable Combinations: The PPF also demonstrates the problem of scarcity. Any point on or inside the curve is an attainable combination, while any point outside the curve is an unattainable combination with the given resources and technology.
