If I want to know if skype is installed, I would type this:

viggy@ubuntu:~$ apt-cache policy skype

skype:i386:

  Installed: 4.0.0.8-1

  Candidate: 4.0.0.8-1

  Version table:

 *** 4.0.0.8-1 0

        100 /var/lib/dpkg/status

Or if Eclipse is installed:

viggy@ubuntu:~$ apt-cache policy eclipse

eclipse:

  Installed: (none)

  Candidate: 3.7.2-1

  Version table:

     3.7.2-1 0

But let's say I want to know if the Java Virtual Machine is installed. How would I know what to pass to apt-cache policy? For example, you might not know what to pass to apt-cache policy for some programs:

viggy@ubuntu:~$ apt-cache policy java

N: Unable to locate package java

viggy@ubuntu:~$ apt-cache policy JVM

N: Unable to locate package JVM