Chapter 2 Fundamental Concepts and Terminologies
Chapter 2 Fundamental Concepts and Terminologies
1. Choose correct option for the following from the options provided :
1. Which value expresses the importance of a good in human life?
(A) Exchange-value
(B) Use-value
(C) Consumption-value
(D) Internal-value
2. What is the monetary payment in exchange of a good called?
(A) Value
(B) Exchange
(C) Price
(D) Wealth
3. Which of the following is a physical good?
(A) Music
(B) Education
(C) Doctor’s advice
(D) Refrigerator
4. Which of the following is not a characteristic of wealth?
(A) Possesses usefulness
(B) Should be available in abundance
(C) Has an explicit existence
(D) Is capable of being exchanged
5. Which of the following signifies all forms of natural wealth?
(A) Capital
(B) Labour
(C) Land
(D) Money
6. Which is not a type of trade cycle?
(A) Irregular changes
(B) Seasonal changes
(C) Short run regular changes
(D) Long run regular changes
2. Answer the following questions in one sentence :
1. State the meaning of value.
Answer:
Value refers to the importance or worth of a product measured either in terms of another product or in terms of money, which is also known as its price.
2. Give meaning and example of commodities which are universally and abundantly available.
Answer:
Items that are freely available in nature and lack any exchange value are called non-economic goods. These are naturally plentiful. Example: Air and sunlight.
3.What is meant by perishable goods in economics?
Answer:
Perishable goods are items that cannot be stored for a long time and are meant for one-time use. Example: Fruits, milk, meat, etc.
4. Give the meaning and example of consumer goods.
Answer:
Goods used by consumers that fulfill their needs directly and are ready for final use are called consumer goods. Example: Prepared meals.
5. What is meant by individual wealth?
Answer:
The possessions owned by a person for their personal use or benefit are known as individual wealth. For example, a personal residence.
6. Give the meaning of factors of production.
Answer:
The elements involved in the creation of goods and services are known as the factors of production. They include:
Land
Labour
Capital
Entrepreneur
7. Give the meaning of wealth.
Answer:
Wealth refers to items that are valuable, limited in availability, exchangeable, and owned by individuals or institutions.
8. Give the definition of trade cycle given by Heberler.
Answer:
As per Heberler, a trade cycle is a sequence that includes alternating periods of economic prosperity and downturn or depression.
9. How many phases are there in a trade cycle? Which are those?
Answer:
There are four stages in a trade cycle:
Boom
Recession
Depression
Recovery