Chapter 2
Q1) Explain human wants ? With its features .
Sol- W ant is an effective desire for a particular thing ,which can be satisfied by making an effort to
acquire it .Wants for a good can be 1) Necessities 2) Comforts 3) luxuries .
Features of Human wants are -
1) wants are unlimited
2) Wants are complementary.
3) Wants can be substituted.
Q2) What is consumption?
Sol- is the act of using goods and services to satisfy human wants.
Q3) What is utility ? Explain its features.
Sol- refers to the want -satisying power of a commodity.
Features of utility -
1) Utility is subjective.
2) It is not mesurable
3) It is variable.
Q4) What is Total utility ?
Sol- refers to the entire amount of satisfaction obtained from consuming a given quantity of a
commodity.
Q5) what is marginal utility ?
Sol- is the additional utility arising from the consumption of one more unit of a commodity.
Q6) What is production?
Sol- Production is a act of making goods and services .It is the act of creating utility through.
Q7) What are the factors of Production?
Sol- Productive resources are known as factors of [Link] ,labour , capital and entrepreneurs
are the factors of production.
Q8) Define Price ?
Sol- Price of a commodity is the amount of money that has to be given to get this commodity .Goods
have a price because they are useful and [Link] are determined by the forces of demand and
supply. Equilibrium price is the price which equals demands with supply.
Q9) What are market ?
Sol- Market means a system or set up in which the buyers and sellers of a commodity are able to
interact and communicate with each other and strike a deal about the price and quantity.
Q10) What are Goods market ?
Sol- Goods markets where goods and services are brought and sold.
Q11) what is Factor market ?
Sol- Factors markets are the Markets where factor services are purchased and sold .
Q12) What is money ?
Sol- money is defined as anything which is generally accepted as a means of exchange and acts as a
measure and store of value .it comprises currency and deposits (bank) money.
Q13) What is barter system ?
Sol- Barter system refers to the system of exchange where goods and services are exchanged directly for
others goods and services.
Q14) What is Income ?
Sol- Income is the flow of goods and services or flow of money over time . Personal income is the
income earned by an individual by selling his factor services to firms.
Q15) What is National income ?
Sol- National income is defined as the value of all final goods and services produced by the residents of a
country in a year.
Q16) What is savings?
Sol- Savings refers to that part of the income which is not spent on [Link] comprises personal
savings , business savings and government savings.
Q17) What is investment?
Sol- Investment is the act of using productive resources for the production of investment goods .It
consist of addition to capital goods , business construction, construction of residential houses and
addition in stocks.
Q18) Define wealth?
Sol- Wealth is the stock of goods which are source of income. For ex money , financial assets ,bonds and
shares.
Q19) Explain business cycle ?
Sol- Business cycle is defined as the recurrent fluctuations in the aggregate economic activity.
Q20) What is aggregate Demand ?
Sol- Aggregate demand is defined as the total amount of goods demanded in the economy.
AD= C +I + G
Q21) what is aggregate supply?
Sol- Aggregate supply refers to the total amount of output which all the the firms or producers are
willing to produce in an economy .
