Know what to write in an answer

Economics in Class 12 deals with topics that require clarity and in-depth understanding of the concepts. Along with conceptual knowledge, student should also know what and how much to write in each question. The following questions illustrate what should be written in an answer without unnecessary explanations in order to save time.

“Machine purchased is always a final good.” Do you agree? Give reasons for your answer.
For these types of questions, students usually associate that a good can be either an intermediate or a final good. Always remember that a good itself can’t be an intermediate good or a final good. It is the ultimate use of the good that would determine whether it is final or intermediate. Define both intermediate goods and final goods and then with the help of an example explain when it would be intermediate or final.

A lot of people died and many factories are destroyed because of a severe earthquake in a country. How will it affect the country’s PPC?
While attempting such questions, reason out logically that due to the fact stated whether the resources will decrease/increase or not. If resources decrease, there will be a leftward shift and vice versa. If resources are not being fully employed, then production would be inside the PPC without any shift of PPC.
In the above case, since resources decreased due to the earthquake, PPC will shift leftward.

Explain the implications of the following features:
(a) Product differentiation
(b) Freedom of entry and exit of firm

While writing an answer to questions which ask about the implications of the features of various market forms, students usually explain the features and forget to mention the implications. Therefore, it is important to remember that the feature should be stated in one or two sentences but implications should be explained in detail.

For example, if the implication of product differentiation in monopolistic competition is that a firm can behave like a monopolist and determine the price of a commodity and the implication of freedom of entry and exit of firms is that a firm earns normal profit in the long run.

Authored by Manju Arora.
Published in Hindustan Times, New Delhi, February 26, 2013.
(Manju Arora is the Head of the Department for Economics at Studymate- Learning Centers from Hindustan Times).