ICSE Class 12 Economics — Flashcards for Quick Revision

A: Economics is concerned with the study of individual and social choice in situations of scarcity. It studies how scarce resources are used at the individual level and at the level of the whole economy.

A: Scarcity means lack of availabilities. It refers to a situation when resources are not enough to satisfy all the wants of the people. This makes choice necessary in every economy.

A: Resources are those goods and services which are used to produce other goods and services. They are classified into land, labour, capital, and entrepreneurship, and are also called factors of producti

A: Demand means desire for a commodity backed by purchasing power. In simple words, a want becomes demand only when a consumer has both willingness and ability to buy the good at a given price and time.

A: Effective demand means desire plus purchasing power. It is also called effective desire or want. A want becomes demand only when it is stated with reference to price and period of time.

A: Demand is a flow concept because it is expressed per unit of time, such as per day, per week, or per month. Demand is not just a quantity; it is a quantity demanded during a time period.

A: Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. It is shown by Ed. A higher value means demand responds more to price change.

A: The formula is E_{d}=\frac{\text { Percentage change in quantity demanded }}{\text { Percentage change in price }}. It measures how much demand changes in percentage terms when price changes in percen

A: The proportionate method is E_{d}=\frac{\frac{\Delta Q}{Q}}{\frac{\Delta P}{P}}=\frac{\Delta Q}{Q} \times \frac{P}{\Delta P}. It is the same idea as the percentage method, written in algebraic form af