Basic Economic Concepts: Micro and Macro, Demand and Supply, and Sectors
Basic Economic Concepts: Micro and Macro, Demand and Supply, and Sectors
Economics questions in NTPC begin with definitions: what microeconomics and macroeconomics study, how demand and supply behave, and which sector an activity belongs to. Clear one-line definitions answer most of these questions.
1. Micro and Macro
| Branch | Studies | Examples |
|---|---|---|
| Microeconomics | Individual units: a consumer, a firm, one market | Price of a product, a firm's output |
| Macroeconomics | The economy as a whole | National income, inflation, unemployment, money supply |
J.M. Keynes is called the father of modern macroeconomics; Adam Smith (The Wealth of Nations, 1776) the father of economics
2. Demand and Supply
| Concept | Meaning |
|---|---|
| Law of demand | Other things equal, quantity demanded falls as price rises (inverse relation) |
| Law of supply | Quantity supplied rises as price rises (direct relation) |
| Equilibrium price | Where demand equals supply |
| Elasticity of demand | Responsiveness of demand to a change in price |
| Giffen goods | Inferior goods whose demand rises with price (an exception to the law of demand) |
| Complements and substitutes | Car and petrol (complements); tea and coffee (substitutes) |
3. Sectors of the Economy
| Sector | Activities | Examples |
|---|---|---|
| Primary | Use of natural resources | Agriculture, fishing, mining, forestry |
| Secondary | Manufacturing and processing | Factories, construction, electricity, gas and water supply |
| Tertiary (services) | Services | Banking, transport, trade, IT, education, health |
The tertiary sector contributes the largest share of India's GDP; agriculture employs the largest share of workers
Organised and unorganised sectors; public and private sectors are other classifications
✗ Construction is a tertiary activity | ✓ Construction is part of the secondary (industry) sector
✗ Inflation is a microeconomic topic | ✓ Inflation concerns the whole economy, so it is macroeconomic
हिंदी नोट: व्यष्टि अर्थशास्त्र एक उपभोक्ता या फर्म का अध्ययन करता है, समष्टि अर्थशास्त्र पूरी अर्थव्यवस्था का। माँग का नियम: कीमत बढ़ने पर माँग घटती है। निर्माण (कंस्ट्रक्शन) द्वितीयक क्षेत्र में आता है; सेवा क्षेत्र का GDP में सबसे बड़ा हिस्सा है।
Exam Pointer: Verified NTPC pattern: the sector to which construction belongs (June 2025 Graduate CBT-1). Micro-macro and demand-supply definitions are tagged syllabus-based.
Pariksha Pattern: Every Way NTPC Asks This Topic
Pattern 1: Sector classification
[PYQ: NTPC Graduate CBT-1 24-Jun-2025 Shift-2]
EXAM LEVEL
Q. Under which sector is construction classified in India?
The secondary sector.
Answer: Secondary
EXAMATLAS LEVEL
Q. Classify mining, electricity supply and banking into sectors, and name the sector with the largest share of India's GDP.
Mining is primary, electricity supply secondary and banking tertiary. The tertiary (services) sector has the largest GDP share.
Answer: Primary, secondary, tertiary; tertiary
Pattern 2: Micro and macro
[Pattern: syllabus-based, PYQ-style]
EXAM LEVEL
Q. Is the study of national income micro or macro economics?
Macroeconomics.
Answer: Macroeconomics
EXAMATLAS LEVEL
Q. Who is called the father of economics, which book did he write, and who is called the father of modern macroeconomics?
Adam Smith, The Wealth of Nations (1776); J.M. Keynes.
Answer: Adam Smith, The Wealth of Nations; Keynes
Pattern 3: Demand and supply laws
[Pattern: syllabus-based, PYQ-style]
EXAM LEVEL
Q. What relation between price and quantity demanded does the law of demand state?
An inverse relation: quantity demanded falls when price rises, other things being equal.
Answer: Inverse relation
EXAMATLAS LEVEL
Q. What are goods called whose demand rises with their price despite being inferior, and what is the price at which demand equals supply?
Giffen goods; the equilibrium price.
Answer: Giffen goods; equilibrium price
Pattern 4: Complements, substitutes and elasticity
[Pattern: syllabus-based, PYQ-style]
EXAM LEVEL
Q. Are tea and coffee complements or substitutes?
Substitutes.
Answer: Substitutes
EXAMATLAS LEVEL
Q. If the price of petrol rises sharply, what is likely to happen to the demand for cars, and why?
It is likely to fall, because cars and petrol are complements used together.
Answer: Demand for cars falls; they are complements
60-Second Revision
- Micro: individual units; macro: whole economy.
- Demand inverse to price; supply direct; equilibrium where they meet.
- Giffen goods are the classic exception.
- Primary (natural resources), secondary (manufacturing, construction), tertiary (services).