NEB 12 Econmics Test 30 January 2026

FEEN Weekly Test Series

Subject: Economics (Class 12)

Topic: Introduction to Economics & PPC

Time: 1 Hour • Full Marks: 25

Group A: Short Answer Questions (5 Marks Each)

1. Introduction to Economics

Question: What is Economics? Briefly explain the definitions of economics given by Adam Smith, Alfred Marshall, and Lionel Robbins.

💡 Key Points for Answer:

• Adam Smith (Wealth Definition): Economics is the science of wealth (production and distribution).
• Alfred Marshall (Welfare Definition): Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is closely connected with the attainment of material requisites of well-being.
• Lionel Robbins (Scarcity Definition): Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.

2. Micro vs. Macro Economics

Question: Differentiate between Microeconomics and Macroeconomics.

💡 Comparison Table Hint:

Basis	Microeconomics	Macroeconomics
Scope	Individual units (consumer, firm)	Whole economy (National Income)
Objective	Price determination	Full employment & growth

3. Division of Labour

Question: What do you understand by "Division of Labour"? Explain its advantages and disadvantages.

💡 Definition: Breaking down a complex production task into smaller, simpler tasks performed by different workers.
Pros: Efficiency, Specialization, Time Saving.
Cons: Monotony, Loss of Craftsmanship.

4. Production Possibility Table (PPT)

Question: What is a Production Possibility Table (PPT)? Construct a hypothetical PPT and derive a PPC from it.

💡 Hint: Create a table with 2 goods (e.g., Guns vs. Butter). Show that as you increase Butter, you must sacrifice increasing amounts of Guns (Opportunity Cost).

Group B: Long Answer Question (10 Marks)

5. Production Possibility Curve (PPC)

Question: Explain the concept of Production Possibility Curve (PPC) with the help of a schedule and diagram. Describe the causes of outward and inward shifts in the PPC.

✅ Structure of the Answer:

1. Definition: Graphical representation of two goods produced with limited resources.
2. Assumptions: Full employment, fixed technology, two goods.
3. Schedule: Make a table showing combinations A, B, C, D, E.
4. Diagram: Draw the concave curve. Points inside = Inefficient. Points outside = Unattainable.
5. Shifts:
   • Outward Shift (Right): Economic Growth, New Technology, New Resources.
   • Inward Shift (Left): Natural Disaster, War, Destruction of Resources.

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