Economics is the study of how people use limited resources to satisfy their unlimited wants. It helps us understand how individuals, businesses, and governments make decisions about money, production, and consumption.
NDA & CDS 1 2026 Exam GK – Economics
What is Economics?
Economics is the study of how people use limited resources to satisfy their unlimited wants. It helps us understand how individuals, businesses, and governments make decisions about money, production, and consumption.
In simple words, Economics answers three basic questions:
- What to produce?
- How to produce?
- For whom to produce?
Types of Economics
1. Microeconomics
- Studies individual units like households and firms
- Focuses on demand, supply, price, and consumer behavior
👉 Example: Price of a mobile phone in the market
2. Macroeconomics
- Studies the economy as a whole
- Includes inflation, unemployment, national income
👉 Example: India’s economic growth rate
Basic Economic Problem
The main problem in economics is scarcity.
🔸 Resources are limited
🔸 Human wants are unlimited
This leads to:
- Choice making
- Opportunity cost (what we give up to get something else)
👉 Example: If you spend money on a book, you give up buying snacks—that is opportunity cost.
Factors of Production
There are four main factors:
- Land – Natural resources (soil, water, minerals)
- Labour – Human effort (physical & mental)
- Capital – Money and machinery
- Entrepreneur – Person who organizes production
Importance of Economics
✔ Helps in better decision making
✔ Useful in managing money
✔ Explains market behavior
✔ Important for government policies
✔ Helps reduce poverty and unemployment
Economic Activities
Economic activities are those that involve earning money:
- Farming
- Business
- Teaching
- Manufacturing
Non-economic activities:
- Helping others
- Household work
Conclusion
Economics is an essential subject that helps us understand how the world works financially. From daily spending to national development, economics plays a major role in shaping our lives.
MCQs on Economics (With Answers)
1. Economics deals with:
A. Unlimited resources
B. Limited wants
C. Unlimited wants and limited resources
D. Only money
✅ Answer: C
2. Who is known as the father of Economics?
A. Karl Marx
B. Adam Smith
C. Keynes
D. Marshall
✅ Answer: B
3. Microeconomics studies:
A. Whole economy
B. Individual units
C. Government policies
D. Inflation
✅ Answer: B
4. Scarcity means:
A. Abundance of resources
B. Lack of resources
C. No wants
D. Unlimited supply
✅ Answer: B
5. Opportunity cost is:
A. Cost of production
B. Next best alternative forgone
C. Profit earned
D. Money saved
✅ Answer: B
6. Which is a factor of production?
A. Money
B. Land
C. Price
D. Demand
✅ Answer: B
7. Macroeconomics deals with:
A. Individual income
B. National income
C. Household decisions
D. Price of a product
✅ Answer: B
8. Which is an economic activity?
A. Sleeping
B. Studying for fun
C. Teaching in school
D. Playing games
✅ Answer: C
9. Capital includes:
A. Labour
B. Machinery
C. Land
D. Water
✅ Answer: B
10. The basic problem of economics is:
A. Poverty
B. Unemployment
C. Scarcity
D. Inflation
✅ Answer: C
