Introduction

Q.1 Give an appropriate definition of Economics. Ans.: The term economics is derived from two Greek words OIKOS and NEMEIN meaning the role or law of the household Economics is the stud! of how "eo"le and societ!# choose to em"lo! scarce resources with or without the use of mone!# that could have alternative $uses in order to "roduce$ various commodities and to distri%ute them for consum"tion# now or in the future among various "ersons and grou"s in societ! Q.2 How Economics is a Science and Arts? Ans.: The term science has %een defined as a s!stemati&ed %od! of knowledge# which traces the relationshi" %etween cause ' effect (""l!ing this definition to economics we find that economics is that %ranch of knowledge where the various facts relevant to it have %een s!stematicall! collected# classified and anal!&ed (n arts is a s!stem of rules for the attainment of a given end (n art is "ractical a""lication of knowledge Economic has all these features of %oth art ' science Q.3 How Economics is as a Normative and ositive Science? Ans.: It deals with thing as the! ought to %e It has no o%)ection to discussion the moral rightness or wrongness of things Economics is not onl! e*"laining facts as the! are %ut also )ustifies them +ositive Science deals with things as the! are ie ,hat is It e*"lains their causes and effect %ut it remain strictl! neutral as regards the result# it refuses to "ass moral )udgments -oth can %e differentiated as follows .

!asis E*"resses -ased on 1eal with 2alue

ositive ,hat is /ause ' effect (ctual or realistic situation Not given

Normative ,hat ought to %e 0acts ' Ethics Idealistic situation (re given

Q." #$at is %icro and %acro Economic? Ans.: The term Micro derived from greek word Mikros which means small It is /oncerned with the stud! of individual decision units The term macro has %een derived from greek word Makros which means large It is that %ranch of economics which studies the %ehaviour of not one "articular unit# %ut of all units com%ined together -oth can %e differentiated as follows . Sr No 3 4 5 6 7 9 : /entral +ro%lem +rice Sco"e ;nderstanding -asis Stud! 1eal with Tools Micro Individual Individual units 1emand ' Su""l! of +articular commodities +rice determination of commodities ' 0actors of +roduction 8elative "rices decide Narrow Easier Macro Econom! as a whole (ggregate units (ggregate demand ' (ggregate su""l! of Econom! as a whole 1etermination of Income ' em"lo!ment (%solute "rices decide ,ider /om"le*

Q.& #$at is Economic 'aw? Ans.: Economic laws are intellectual e*"eriments carried out with the hel" of certain assum"tions It is a statement a%out the cause and effect relationshi" %etween two economic "henomenon which can %e measured in terms of mone! "rice

Q.( #$at is !usiness Economics? Ans.: It is that %ranch of knowledge in which theories of economics are used for solving actual -usiness management "ro%lems and determination of %usiness "olicies )$aracteristics of !usiness Economics : <i= Micro economic in nature <ii= Theor! of firm or economics of firm <iii= Im"ortance of macro economics <iv= +ragmatic ' a""lied a""roach <v= +ers"ective nature <vi= 1ecision making at managerial level <vii= /oordinating nature <viii= -oth science and arts <i*= More refined su%)ect Q.* oint out t$e importance or si+nificance of !usiness Economics? Ans.: <i= >el"ful in organi&ing <ii= >el"ful in "lanning <iii= >el"ful in decision making <iv= >el"ful in coordination <v= >el"ful in cost control <vi= >el"ful in demand forecasting <vii= Minimi&ing uncertainties <viii= >el"ful in chalking out %usiness "olicies <i*= >el"ful understanding e*ternal environment Q., #$at are t$e scope of !usiness Economics? Ans.: <i= 1emand anal!sis and forecasting <ii= +olitical "lanning and management <iii= /ost anal!sis <iv= +ricing "olicies and "ractices <v= +rofit management <vi= /a"ital management <vii= 1ecision management under uncertaint! <viii= Sales "romotion ' strateg!