NCERT Class 12 Economics Introductory Microeconomics: Chapter 1 — Introduction Introduction Introduction Introduction Introduction
This chapter introduces the fundamental concepts of economics, starting with a simple economy. It explains that individuals and societies have unlimited wants but limited resources, leading to the problem of scarcity. Every decision-making unit, whether an individual, family, or firm, must make choices about how to allocate its scarce resources to produce and consume goods and services. The chapter highlights that the production of goods and services must be compatible with societal wants. It defines key terms like goods, services, individuals (decision-making units), and resources. The core economic problems of resource allocation and distribution of goods and services are introduced, setting the stage for understanding the central problems of an economy: what to produce, how to produce, and for whom to produce, all stemming from the fundamental issue of scarcity.
Quick info
| Board | CBSE / NCERT |
|---|---|
| Class | Class 12 |
| Subject | Economics |
| Book | Introductory Microeconomics |
| Chapter | Chapter 1 — Introduction Introduction Introduction Introduction Introduction |
| Language | English |
| PDF type | NCERT Textbook |
| Session | CBSE 2026 |
| Reading time | 4 minutes |
| Word count | 660 |
Learning outcomes
- Understand the concept of scarcity of resources.
- Recognize the problem of choice arising from scarcity.
- Define key economic terms like goods, services, and resources.
- Identify the basic economic problems faced by any economy.
- Grasp the relationship between production, consumption, and societal wants.
Vocabulary
| Word | Meaning |
|---|---|
| Goods | Physical, tangible objects used to satisfy people's wants and needs. |
| Services | Intangible satisfaction of wants and needs. |
| Individual | An individual decision-making unit, which can be a single person or a group. |
| Resource | Goods and services used to produce other goods and services (e.g., land, labour, tools). |
| Scarcity | The condition where resources are limited in comparison to unlimited wants. |
| Allocation of resources | How much of each resource is devoted to the production of each good or service. |
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Practice questions
- What is the fundamental reason for the existence of economic problems? Answer: The fundamental reason is the scarcity of resources in comparison to unlimited human wants.
- Give an example of a good and a service. Answer: Example of a good: Food. Example of a service: Education provided by a teacher.
- What does 'allocation of resources' mean in economics? Answer: It refers to the decision-making process of how scarce resources are distributed among the production of various goods and services.
- Why must every individual in society make choices? Answer: Every individual must make choices because their resources are limited, while their needs and wants are unlimited.
Practice MCQs
Q1. Which of the following is a key characteristic of resources in an economy?
Explanation: Resources are scarce and have multiple potential uses, leading to the need for allocation decisions.
Q2. The term 'goods' in economics refers to:
Explanation: Goods are defined as physical, tangible items that satisfy human wants and needs.
Q3. The problem of choice arises primarily due to:
Explanation: Scarcity, caused by unlimited wants and limited resources, forces individuals and societies to make choices.
Q4. Which of the following is NOT considered a resource in the context of production?
Explanation: Wants are unlimited desires, whereas resources are the means used to satisfy those wants.
Q5. What is a fundamental economic activity mentioned in the chapter?
Explanation: The chapter identifies production, exchange, and consumption as basic economic activities.
Frequently asked questions
What is the basic definition of a 'good' in economics?
A 'good' refers to any physical, tangible object that is used to satisfy people's wants and needs.
What is the difference between goods and services?
Goods are physical and tangible, like food or clothes, while services are intangible satisfactions, like those provided by doctors or teachers.
Why is scarcity a fundamental concept in economics?
Scarcity is fundamental because human wants are unlimited, but the resources available to satisfy them are limited, forcing choices.
What are the two basic economic problems mentioned for a society?
The two basic economic problems are the allocation of limited resources and the distribution of the final mix of goods and services produced.
What does an 'individual' mean in the context of economics as per the chapter?
An 'individual' refers to any decision-making unit, which can be a single person, a household, a firm, or any other organization.
How does scarcity lead to the problem of choice?
Because resources are scarce relative to unlimited wants, individuals and societies must choose which wants to satisfy and how to use their limited resources most effectively.
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NCERT Class 12 Economics — Introductory Microeconomics — Chapter 1 — Introduction Introduction Introduction Introduction Introduction. Verified by NCERT Help Editorial Team. Reviewed on 29 Jul 2026. Last updated 10 Aug 2026.