Introduction Class 12 Economics Notes and Questions

Please refer to Economics Introduction Class 12 Economics Notes and important questions below. The Class 12 Economics Chapter wise notes have been prepared based on the latest syllabus issued for the current academic year by CBSE. Students should revise these notes and go through important Class 12 Economics examination questions given below to obtain better marks in exams

Introduction Class 12 Economics Notes and Questions

The below Class 12 Introduction notes have been designed by expert Economics teachers. These will help you a lot to understand all important topics given in your NCERT Class 12 Economics textbook.

Points to Remember
• Micro economics studies the behaviour of an individual economic unit.

Example : Demand of an individual consumer, Production of a firm etc.

• Macro economics studies the behaviour of the economy as a whole.
Example : Aggregate Demand, National Income etc.

• An economy is a system that helps to produce good and services and enables people to earn their living.

• Economic problem is the problem of making the choice of theuse of scarce resources for satisfying unlimited human wants.

• Causes of economic problems are :
(a)Unlimited Human Wants
(b)Scarcity of Economic Resources
(c)Alternative uses of Resources

Central Problems of an Economy

• Opportunity cost of a given resource can be defined as the value of the next best use to which that resource could be put

• Production possibility frontier shows all possible combinations oftwo goods that an economy can produce with given resources and available technology, assuming that all resources are fully and efficiently utilised.

• Economising of resources means use of resources in best possible manner.

• Features of Production Possibility Frontier
(a)Slopes downward from left to right because to increase the production of one good, some units of other good has to be sacrificed.

(b)Concave to the origin because of increasing Marginal Opportunity Cost (MOC) or Marginal Rate of Transformation (MRT). MRT is increasing because all resources are not
equally efficient in the production of both goods.

• Rightward shift of PPF indicates increase in resources or improvement in technology of both goods.

• Leftward shift of PPF indicates decrease in resources or degradation in technology.

• PPC will shift rightwards due to all those reasons which enhances production potential, quantity and efficiency of resources in an economy.

• Marginal Rate of Transformation (MRT) is the ratio of number of units of a good sacrificed to increase one more unit of the other good.
MRT=Δy/ΔX

• MRT can also called Marginal Opportunity Cost. It is defined as the additional cost in terms of number of units of a good sacrificed to produce an additional unit of the other good.

• When MOC increases, PPF is concave to origin. When MOC decreases PPF is convex to origin and when MOC remains constant, PPF is downward sloping straight line.

• Positive Economic Analysis : It deals with the things ‘as theyare’. It represents facts like what was? What is? What will be?
etc. Example : ‘India is overpopulated’, Prices have been rising in India’. It can be verified.

• Normative Economic Analysis : It deals with things as ‘they ought to be’. It deals with idealistic situation instead of actual situation.Example : ‘Rich people should be taxed more’. Free educationshould be given to the poor’. It can’t be verified.