Economics · Class 11 Commerce
Ch 2Fundamental Concepts and Terminologies — Class 11 Economics, concept-first.
Every economic activity begins with a want — a felt need that motivates a person to work, earn, and spend. A person feels a want, works to earn income, and spends that income to satisfy the want, which in turn creates fresh wants; this never-ending cycle (want → effort → income → satisfaction → new want) is often calle…
Key concepts
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Wants and Goods
A want is a felt need whose satisfaction motivates economic activity; wants are unlimited, recurring, variable in urgency, and can be competitive or complementary with one another.
Most relevant Q&A
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Wants and Goods
Every economic activity begins with a want — a felt need that motivates a person to work, earn, and spend.
Utility: Meaning, Total and Marginal Utility
Utility is the want-satisfying power of a good or service — the satisfaction a consumer expects, or actually derives, from consuming a unit of a commodity.
Value and Wealth
Value, in economics, refers to the worth of a commodity, expressed either in terms of its usefulness or in terms of the other goods it can command in exchange.
Income and Price
Income is the flow of earnings a person or a factor of production receives, over a period of time, as a reward for rendering a productive service.
Stock and Flow
Many economic quantities can be properly understood only once we know whether they are measured at a point in time or over a period of time.
Factors of Production
Production requires combining human and non-human resources, traditionally grouped into four factors of production, each earning its own characteristic reward:
Exercises
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- Q1Which of the following is a free good? (a) Petrol (b) Sunlight (c) Agricultural land (d) Drinking water sold in a bottleFree
- Q2Distinguish between 'necessities' and 'luxuries' as types of wants, with one example each.Free
- Q3If Total Utility falls when an additional unit of a commodity is consumed, the Marginal Utility of that unit must be: (a) Positive (b) Zero…Free
- Q4A consumer's total utility from consuming successive cups of tea is given below. Work out the marginal utility for each cup and state at whi…Preview
- Q5Explain the 'water–diamond paradox' and how it is resolved.Preview
- Q6State and explain the essential characteristics of wealth in the economic sense.Preview
- Q7A person's own good health is NOT classified as 'wealth' in the economic sense mainly because it fails the test of: (a) Utility (b) Scarcity…Preview
- Q8Classify the following as Stock or Flow, giving one reason each: (i) Wealth (ii) Income (iii) Population (iv) InvestmentPreview
- Q9Explain, with an example, how a stock variable and its corresponding flow variable are related to each other.Preview
- Q10Explain the four factors of production and state the reward received by each.Preview
- Q11The reward for entrepreneurship/organisation is called: (a) Rent (b) Wages (c) Interest (d) ProfitPreview
- Q12Why is land often described as a 'free gift of nature'? State two characteristics of land as a factor of production.Preview