Basic Economic Problems and the Economy Class 8 Notes Questions and Answers Social Science Chapter 4

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Class 8 Social Science Chapter 4 Basic Economic Problems and the Economy Notes Questions and Answers

Class 8 Social Science Basic Economic Problems and the Economy Notes Questions and Answers

Class 8 Social Science Chapter 4 Question Answer Kerala Syllabus

Question 1.
List the basic and gratifying needs in our life.
Answer:

Basic needs	Gratifying needs
Food, Clothing, Shelter, Medicine, Roads, Education, Clean Water.	Luxury cars, Expensive jewellery, Costly dresses, Luxury homes.

Question 2.
Suppose the school decides to produce the vegetables needed for your school’s noon-meal scheme. What are the decisions to be taken regarding vegetable farming? List them.
Answer:
a) What to produce?

• Choose seasonal vegetables (spinach, brinjal, cucumber, etc.)
• Choose a place with adequate sunlight and water level on the outskirts of the school. Install drip irrigation or sprinkler system for watering.
• Make the soil effective with organic manure.
• Take care of agriculture with the help of students, teachers and parents.
• Conduct regular monitoring for pesticides, weed control, etc.

b) How to produce?

• Budget preparation: Prepare funding for seeds, fertilisers and watering supplies.
• Marketing/Use: Include the produced vegetables in the school mid-day meal scheme.

c) For whom to produce?
• Considering the needs of the school, economic and environmental goods will be produced and used for the school lunch and will provide financial profit.

Question 3.
What are the products that produced in your area that meet your needs? Are they sufficient for your use?
Answer:
Products: Vegetables, Fruits, Coconut, Milk, Fish, etc.
No one region produces all the products needed to meet their needs. Similarly, products produced in one region may be needed by people in other regions. Some of these products are sufficient, like vegetables and coconut, which are available locally. However, for other needs like wheat, pulses, or packaged goods, we depend on products from other areas. In some seasons, the local production may be less due to weather conditions, so we also rely on nearby markets.

Question 4.
Look at the given pictures.
a) What difference can be seen in the making of chapati in figures 4.3 and 4.4?
b) What factors of production are mostly used here?

Answer:
a) In Figure 4.3, chapatis are made manually by people, while in Figure 4.4, chapatis are produced in large quantities using machines.
b) Fig 4.3 – Labour, Fig 4.4 – Machines (Capital)

Question 5.
Observe the given pictures related to agriculture and note down what factors of production are used more.

Answer:
Fig 4.5 – Labour, Fig 4.6 – Machines (Capital)

Question 6.
List the production activities in your area using labour intensive technique and capital intensive technique.

Answer:

Labour intensive technique	Capital intensive technique
• Building construction • Small-scale farming • Small production units led by Kudumbashree	• Mechanized production units • Industrial-based agriculture • Large-scale industrial units

Question 7.
Look at the situations given below. Identify and write down with which basic economic problem each situation is connected.

Answer:

Members of a Kudumbashree unit decided to start a production unit. Many opinions arose among the members. What will be the basic issue they have to decide?	What to Produce?
At the end of the discussions, it was decided to lease some land and cultivate it. The right proportion of labourers and machinery to prepare the land for agriculture was discussed. To what basic economic problem does this relate?	How to Produce?
There are families which do not grow vegetables in the area where the Kudumbashree unit works. They also need vegetables. The Kudumbashree unit aims to sell the surplus to those in need. The profit from agriculture has to be distributed among the members. To what basic economic problem does this relate?	For Whom to Produce?

Question 8.
Organise a panel discussion and prepare a report on ‘Characteristics of Different Types of Economies’.
Answer:
(Hints)
Step 1: Choose the Topic (Characteristics of Different Types of Economies)
DIFFERENT TYPES OF ECONOMIES
Economy can be classified into three on the basisc of ownership of factors of production.

Features of the Economies
Capitalist Economy	Socialist Economy	Mixed Economy
• All persons have the right to own property. • Maximum profit. • Limited government intervention. • Individuals can store resource and use it to produce goods and services as they want. • The consumer has complete freedom in the market (consumer sovereignty). • Competition among industries. • Active participation of government in economic development can be seen today in many countries that follow capitalist economy.	• Ownership of the factors of production is vested in the government. • Social welfare is the main objective. • Government’s control over the market. • The central planning committee utilises resources keeping in view the availability of resources and national objectives. • Reducing inequality in income and wealth. • A centralised planning committee will take decisions on economic activities. • Intervention of private enterprises is also seen in today’s socialist economy.	• Coexistence of private and public sector. • Profitability and social welfare become the main objectives. • Individual freedom in economic activities. • Financial planning for preparation of government schemes. • Government regulation of commodity prices in certain sectors. • Government gives priority to essential goods and services. • In a mixed economy,basic economic problems are solved through markets and centralised planning systems. • India has adopted a mixed economy after independence.

Knowledge Economy
A knowledge economy refers to an economic system in which knowledge and skills are the conductors of growth and innovation. In this economy, knowledge is considered as a key resource. Its creation, dissemination and application are crucial to economic development.

Step 2: Select Panel Members
Step 3: Set up the Stage
Step 4: Start the Discussion
Step 5: Question & Answer Session
Step 6: Summarize and Conclude
Step 7: Prepare the report (Title and Date of the discussion, Names and roles of Panelists, Main points discussed under each economy type, etc)

Question 9.
Find out which of the ideas given below are related to the ideas of different economists.
Answer:

• The rise of the smart phone industries led to the decline of the tape recorder, video player and film camera industries – J. A. Schumpeter
• Government intervention is needed to solve economic problems – J. M. Keynes
• Trade between two countries can benefit both countries and increase the welfare of the people – David Ricardo
• The basis of production is the labour of the workers – Karl Marx

Question 10.
Names of some economists of India and their thoughts are given below. Find the missing ones.

Answer:

Class 8 Basic Economic Problems and the Economy Questions and Answers Extended Activities

Question 1.
Visit any production unit or farm in your neighbourhood and prepare necessary questionnaires to collect information to find out how various goods are produced.
Answer:
(Hint: Questionnaire for a Farm Visit)

• What is the name of this institution/farm?
• How many workers are usually employed on your farm?
• Do you use traditional or modern farming methods?
• What kind of soil and water sources do you use?
• Do you use chemical or organic fertilizers?
• What kind of machines or tools do you use for farming?
• What steps do you follow from sowing to harvesting?
• How do you store or preserve the products after harvest?
• Do you face any problems in marketing your products?

Question 2.
Organise a seminar on characteristics of labour intensive technique and capital intensive technique.
Answer:
(Hints: Conduct a seminar including the given characteristics of labour intensive technique and capital intensive technique.)
HOW TO PRODUCE?

• How to produce is a problem related to the choice of technologies.
• What technology to be used depends on the resources available in that region. There will be a difference in the method of production depending on the availability of resources.
• The Same Product can be produced using different proportions of labour and capital.
• The method of production using more labour and less capital is called ‘Labour Intensive Technique’.
• The method of production using more capital and less labour is palled ‘Capital Intensive Technique’.
• The method of production should be decided keeping in mind the needs of the country and the availability of factors of production.

Characteristics of Labour Intensive Technique	Characteristics of Capital Intensive Technique
Production involving more labourers	Less demand for labourers
Low level of capital utilisation	Utilises more capital investment
A production method that requires more time	Ensures productivity
Eco-friendly production method	Depends more on technology
Limited use of technology	Less time for production

Question 3.
Find out with the help of the teacher which of the following countries have economies in which the government owns and controls most of the means of production.
India, the USA, China, Canada, Sweden, Denmark, England, Cuba, Australia, Pakistan, Sri Lanka.
Answer:
China and Cuba (Socialist Economy)

• Mixed Economy: India, Pakistan, Sri Lanka, Sweden, Denmark, Canada, Australia, England.
• Capitalist Economy: USA

Basic Economic Problems and the Economy Class 8 Notes Pdf

Std 8 Social Science Basic Economic Problems and the Economy Notes

• The essential needs for the survival of life such as food, clothing and shelter can be called basic needs.
• There are certain needs that make our life more comfortable and happy. These are called gratifying needs.
• Human needs are numerous and need to be prioritised to be fulfilled.
• Characteristics of Needs:
  • Human needs are diverse and innumerable
  • Some needs can be met alone and others through collective efforts
  • A need once fulfilled may be repeated
  • Needs vary with time, place and individuals
  • With human progress, needs also change
• There are three basic economic problems that a country faces in relation to the production process of goods and services.
  • What to produce?
  • How to produce?
  • For whom to Produce?
• Each country has to prioritise what to produce using the available resources.
• How to produce is a problem related to the choice of technologies.
• The method of production using more labour and less capital is called ‘Labour Intensive Technique’.
• The method of production using more capital and less labour is called ‘Capital Intensive Technique’.
• The question for whom to produce means how goods and services produced are distributed among the people.
• An economy is the way a country organises the production, distribution and consumption of various goods and services.
• Economy can be classified into three on the basis of ownership of factors of production. Socialist economy, Capitalist economy, Mixed economy.
• Economics is the discipline that deals with all these economic activities.
• In earlier times economics was known as the science of wealth.
• Adam Smith, is known as the Father of Economics.
• Indian Economists have given great contribution to the development of economics.

INTRODUCTION

Every society, whether rich or poor, faces certain fundamental economic problems due to the scarcity of resources and the unlimited nature of human wants. The chapter “Basic Economic Problems and the Economy” explores these core issues—what to produce, how to produce, and for whom to produce. It also explains how different economic systems such as capitalist, socialist, and mixed economies address these problems in ‘their own ways and the prominent thinkers who played a key role in the development of economics. Understanding these concepts helps us grasp how resources are allocated efficiently and how economies function to meet the needs of the people.

BASIC NEEDS AND GRATIFYING NEEDS

• Needs are fulfilled through proper use of various goods and services.
• The essential needs for the survival of life such as food, clothing and shelter can be called basic needs.
• There are certain needs that make our life more comfortable and happy. These are called gratifying needs. Examples for this include the use of luxury cars, expensive jewellery and costly dresses.

Demands multiply along with progress. But resources may not increase in proportion to demands. We use goods and services with or without payment. Human needs are numerous and need to be prioritised to be fulfilled. Individuals prioritise fulfillment of basic needs. In this way, the country produces many goods and services to fulfill the various needs of man.

Characteristics of Needs

• Human needs are diverse and innumerable
• Some needs can be met alone and others through collective efforts
• A need once fulfilled may be repeated
• Needs vary with time, place and individuals
• With human progress, needs also change

BASIC ECONOMIC PROBLEMS
There are three basic economic problems that a country faces in relation to the production process of goods and services:

WHAT TO PRODUCE?

• Each country has to prioritise what to produce using the available resources. Once it is decided what to produce, the question as how much to produce becomes relevant.
• A country has to produce many goods and services.
• If the country decides to produce more of any one commodity or service, it will have to limit the resources that can be used to produce other goods.
• For example, a country facing food shortage will have to devote a greater share of its available resources to food production. Similarly, it is necessary to decide what industries to start and how many units if it is decided to manufacture industrial products.
• The country takes such decisions to achieve a balance between the needs of the society and the quantity of products produced in the country.

FOR WHOM TO PRODUCE?

• Production should be done to meet the needs of the people.
• The question for whom to produce means how goods and services produced are distributed among the people.
• Production activities should be planned in such a way that available resources are utilised to benefit everyone in the society.
• Goods and services are produced through the combined action of factors of production such as land, labour, capital and organisation.
• The value of the goods produced has to be distributed on the basis of the factors of production according to their share.
• Product value must be distributed as rent to land, wages to labour, interest to capital, and profit to organisation. That means, how the income from production distributed is also important.

ECONOMY
The basic economic problems that exist all over the world are solved through different economies.

• An economy is the way a country organises the production, distribution and consumption of various
  goods and services.
• The function of every economy is to satisfy human needs through the use of the available resources.

ECONOMICS
Economics is the discipline that deals with all these economic activities. It also includes budget, banking, market, and goods and services that we use in our daily life.

Western Economic Thinkers

• In earlier times economics was known as the science of wealth.
• Adam Smith, who is known as the Father of Economics, was the main proponent of this.
• Alfred Marshall formulated economics as the science that deals with welfare.
• Lionel Robbins envisioned economics as the branch that deals with the relationship between human wants and limited resources.

IDEAS THAT INSPIRED THE DEVELOPMENT OF ECONOMICS

	• British economist David Ricardo came up with the theory that trade between two countries can increase the welfare of both countries. • His ‘Theory of Rent’ regarding the lease of land is very famous.
	• German economist and philosopher Karl Marx developed the ‘Theory of Surplus Value’. • According to Marx, the basis of production is the labour of the workers. But only a small portion of this is given to the labourer and the majority is kept by the capitalist.
	• He is an economist who argued for the theory of government intervention in the economic sector. • He opined that economic problems can be solved to some extent through government intervention.
	• J.A. Schumpeter, a native of the Czech Republic, developed the concept of ‘Creative Destruction. • Industries and technologies create new opportunities and growth through innovation. • But he also opined that existing industries and technologies are disrupted or destroyed by innovation.

Indian Economic Thinkers

• Indian Economists have given great contribution to the development of economics.
• Chanakya in ancient India, who devised an efficient tax system for the country’s economic development and Dadabhai Naoroji, the originator of The Drain Theory, are prominent among them.
• Mahatma Gandhi, Father of our Nation, describes the economic visions in his books Hind Swaraj and India of My Dreams.

Gandhiji’s Economic Thoughts

• Gandhiji envisioned an economy based on self-sufficiency and decentralisation.
• Rural industries need to be nurtured to increase employment opportunities locally.
• Expand local markets for marketing locally produced goods.
• Economic inequality should be alleviated to ensure social justice.

Amartya Kumar Sen

• He is the first Indian economist to win the Nobel Prize in Economics.
• He was awarded the Nobel Prize in 1998 for his outstanding contributions to Welfare Economics.
• Amartya Kumar Sen’s thoughts on Welfare Economics:
  • Emphasis should be placed on education, health care and social justice to achieve economic progress.
  • Gender equality and women empowerment are essential for the progress of the country.
  • Economic development should be evaluated on the basis of its influence on human rights and freedoms.

Abhijit Vinayak Banerjee

• Indian-American economist Abhijit Vinayak Banerjee was awarded the 2019 Nobel Prize in Economics for devising an experimental approach to global poverty eradication.
• He shared the Nobel Prize with Esther Duflo and Michael Kremer.