Answer to Question 1
Both the terms refer to ways in which advertisers get their company's name on or near a list of results when a user searches on the Web. A paid search refers to the actions of advertisers on the Web, whereas search engine optimization refers to the behavior of consumers on the Web.
Paid search is a process by which advertisers pay a fee to a portal or search engine site to place ads in or near relevant search results based on key words. For example, if you Google baby toys you will find ads for Internet toy retailers within or next to the list of search results. Paid search can also fine-tune a Web user's search to focus on relevant and specific sites. For example, when an astronomy buff who has made several searches on astronomy-related terminology enters the word Saturn, the search will show results about the planet and not the car.
Search engine optimization (SEO) refers to the process by which the volume and quality of traffic from search engines is improved based on the surfers' profiles. This affects the location of the site on a search results list. The higher that a site is shown on a list, the more likely that a user will visit the site, although the cost may be higher. For example, when a user types a key word on Google search, some of the most popular sites currently being accessed will come up first.
Answer to Question 2
d