Core Concepts and Solved Answers for Economics Chapter 1 Class 11
Important Questions Class 11 Economics Chapter 1 focuses on the foundational economic concepts required for board exams and competitive test preparation. Mastering these questions helps students gain a thorough understanding of core economics principles, practice exam-style answers, and build confidence for future studies in commerce and daily decision-making.
| Central Economic Problems | Description | Examples |
|---|---|---|
| What to Produce | Choosing which goods and services to create using limited resources. | Food or clothing, capital goods or consumer goods |
| How to Produce | Selecting the technique or method for production (labour-intensive vs. capital-intensive). | Handicrafts (labour-based); Car manufacturing (machine-based) |
| For Whom to Produce | Deciding which sections of society receive the produced goods and services. | Distribution between rich and poor, rural and urban |
Important Questions Class 11 Economics Chapter 1: Key Concepts
Chapter 1 introduces core economic issues like scarcity, choice, and opportunity cost. Students must understand these to tackle board exam questions. These concepts also relate closely to real-life situations and help with further chapters such as Basic Concepts of Economics.
What is Scarcity in Economics?
Scarcity means that resources are limited compared to unlimited human wants. This basic economic problem forces individuals and societies to make choices about how to allocate resources. Even developed economies cannot meet all wants, making scarcity universal.
What is Opportunity Cost? With Example
Opportunity cost is the value of the next best alternative forgone when making a choice. For example, if you have Rs. 100 and choose to buy a book instead of going to a movie, the enjoyment of the movie is your opportunity cost. This concept is key in answering questions related to the Production Possibility Curve (PPC).
Central Problems of an Economy
- What to Produce
- How to Produce
- For Whom to Produce
These problems arise due to scarcity and force societies to make decisions. Understanding them is critical for answering both short and long exam questions.
Sample Important Questions and Answers for Class 11 Economics Chapter 1
Below are high-yield questions frequently asked in exams. Use the answer structures as reference for board writing style.
| Question | Answer |
|---|---|
| Define scarcity and explain its implications. | Scarcity means resources are limited compared to human wants. It leads to making choices, forces prioritization, and forms the base of economic study. For example, land, time, and money are all scarce. |
| What are the three central problems of an economy? | The three central problems are: 1. What to produce, 2. How to produce, and 3. For whom to produce. |
| Explain opportunity cost with a real-life example. | When a student chooses to study economics instead of mathematics, the benefit of studying mathematics is the opportunity cost. This concept helps in better use of resources. |
| What does the Production Possibility Curve (PPC) represent? | PPC shows all possible combinations of two goods that can be produced using available resources fully and efficiently. It illustrates scarcity, choice, and opportunity cost. |
| Differentiate between a planned economy and a market economy. | In a planned economy, the government decides production and pricing. In a market economy, decisions are made by buyers and sellers through the market mechanism. Most countries have mixed economies combining both types. |
| What is meant by economizing resources? | Economizing means making the best use of available resources to satisfy the maximum number of wants. This involves comparing opportunity costs and making wise decisions. |
Tips for Answering Economics Class 11 Important Questions
- Start every answer with a precise definition or clear statement.
- Use real-world or simple daily-life examples for explanation.
- Draw and label diagrams like the PPC if relevant (especially in questions on scarcity or choice).
- Highlight keywords such as "scarcity," "opportunity cost," and "resource allocation."
- Keep your answers concise, logical, and structured.
Following these tips will help improve marks and make solutions easier to revise.
Download Class 11 Economics Chapter 1 Important Questions PDF
For quick revision, download the curated PDF with solved important questions and answers. This resource is designed for board exam preparation, last-minute practice, and concept clarity. Click here to download: Class 11 Economics Chapter 1 Important Questions PDF
Application of Concepts in Exams and Real Life
Understanding Important Questions Class 11 Economics Chapter 1 prepares you for CBSE and other board exams. These concepts are also tested in competitive exams like UPSC and SSC. In daily life, knowledge of scarcity and opportunity cost helps in smarter financial or business decisions.
You can also strengthen your foundation by exploring related topics such as Positive and Normative Economics, Scarcity and Choice, and the Production Possibility Curve on Vedantu.
Summary
Important Questions Class 11 Economics Chapter 1 helps students master core principles like scarcity, opportunity cost, and the central problems of economics. Practicing these questions builds exam confidence, improves concept clarity, and provides a solid base for advanced commerce topics. Use PDF resources, examples, and structured answers for best results.
FAQs on Important Questions for Class 11 Economics Chapter 1
1. How should I structure answers for 3-mark or 5-mark important questions from Class 11 Economics Chapter 1 in the board exam?
To score well on important questions from this chapter, structure your answers based on the marks allocated, as per the CBSE 2025-26 pattern.
- For 3-mark questions: Start with a precise definition of the concept (e.g., Opportunity Cost), explain it in one or two sentences, and provide a clear, simple example.
- For 5-mark questions: Provide a detailed definition, explain the concept with at least three distinct points or features, use a diagram where relevant (like a Production Possibility Curve), and end with a concluding statement.
2. What are the three central problems of an economy, and why are they considered fundamental?
The three central problems of an economy are fundamental because they arise directly from the scarcity of resources in relation to unlimited human wants. Every economy must address:
- What to produce? Deciding which goods and services to create and in what quantities, given limited resources.
- How to produce? Choosing the most effective production method, such as using more labour (labour-intensive) or more machinery (capital-intensive).
- For whom to produce? Determining how the produced goods and services will be distributed among the population.
3. Why is the problem of 'choice' considered the core issue in economics?
The problem of choice is the core issue in economics because resources are scarce while human wants are unlimited. This fundamental conflict forces every individual, business, and government to make choices about how to allocate their limited resources. Every decision to use a resource for one purpose means forgoing another, which introduces the concept of opportunity cost. Therefore, economics is essentially the study of how choices are made under conditions of scarcity.
4. Explain the concept of Opportunity Cost using a production-related example.
Opportunity cost is the value of the next-best alternative that is sacrificed when making a choice. For instance, if an economy uses all its resources to produce 100 tonnes of wheat, it cannot produce any cotton. If it decides to produce 80 tonnes of wheat and 20 bales of cotton, the opportunity cost of producing those 20 bales of cotton is the 20 tonnes of wheat that had to be given up.
5. How does a Production Possibility Curve (PPC) illustrate the concepts of scarcity and opportunity cost?
A Production Possibility Curve (PPC) is a graphical tool that illustrates key economic problems:
- Scarcity: The boundary of the PPC shows the maximum possible combination of two goods that can be produced with available resources and technology. Any point outside this curve is unattainable, visually representing the concept of scarcity.
- Opportunity Cost: The downward slope of the PPC shows that to produce more of one good, the production of the other good must be reduced. The amount of the other good sacrificed is the opportunity cost.
6. What is the key difference between how a centrally planned economy and a market economy solve the 'how to produce' problem?
The key difference lies in the decision-making process. In a centrally planned economy, the government or a central authority decides the production technique, often based on national goals like employment generation. In a market economy, the choice of technique is determined by producers aiming to minimise costs and maximise profits, based on the relative prices of capital and labour.
7. Can an economy ever operate exactly on its Production Possibility Curve? Justify your answer.
In theory, an economy operates on its PPC only when it achieves full and efficient utilisation of its resources. However, in the real world, economies almost always operate inside the PPC. This is because some resources are inevitably underutilised (e.g., unemployment) or used inefficiently (e.g., outdated technology). Therefore, operating on the curve represents an ideal state of potential output, not the actual output.
8. What does a rightward shift in the Production Possibility Curve signify, and what are its primary causes?
A rightward shift in the Production Possibility Curve signifies economic growth. It indicates that the economy's productive capacity has increased, allowing it to produce more of both goods. The primary causes for such a shift are:
- An increase in the quantity or quality of resources, like a larger workforce or discovery of new minerals.
- Technological advancements that make production more efficient.
9. Distinguish between 'positive' and 'normative' economics, as this is an important concept for Class 11 exams.
Positive economics describes economic phenomena as they are, based on facts and data. It focuses on 'what is'. An example is: "An increase in the minimum wage leads to unemployment." This is a testable statement. Normative economics, on the other hand, involves value judgements and opinions. It focuses on 'what ought to be'. An example is: "The government should increase the minimum wage to reduce poverty."
10. Is 'scarcity' a problem only for developing countries? Explain why or why not.
No, scarcity is a universal economic problem that affects all countries, regardless of their level of development. While the specific goods that are scarce may differ, even the wealthiest nations have finite resources (like skilled labour, natural resources, and time) relative to their society's infinite wants. Therefore, every economy must make choices and face trade-offs, making scarcity a fundamental and inescapable economic condition for all.
