Economics (318) - April' 2013 | NIOS SENIOR SECONDARY Solved Papers

ECONOMICS (April’ 2013)
Time: 3 Hours
Maximum Marks: 100

Note : (i) This Question Paper consists of two Sections, viz., ‘A’ and ‘B’.
(ii) All questions from Section ‘A’ are to be attempted.
(iii) Section ‘B’ has got more than one option. Candidates are required to attempt questions from one option only.
1. What is meant by marginal revenue? When sales increase by one more unit, total revenue increases from R 1,980 to R 2,500. Find marginal revenue.                          2
2. If a curve is upward rising from left to right, how are the two variables related? Give an example of an upward rising curve.                                      2
3. Classify the following as fixed cost or variable cost:                                                                   2
a)      Rent on factory building
b)      Expenditure incurred on raw material
c)       Property taxes
d)      Interest on borrowed capital
4. Define ‘stock’ and ‘flow’ concepts.                                                                                                     2
Ans.:- A stock is measured at one specific time, and represents a quantity existing at that point in time (say December 31, 2004), which may have accumulated in the past.
 A flow variable is measured over an interval of time. Therefore, a flow would be measured per unit of time (say a year).

5. What is value added? What is value added if a firm’s value of output is Rs. 20,000 and intermediate consumption is R 4,990?                                                                   2
Ans.:- Value added is the difference between the price of product or service and the cost of producing it.
                Value added = value of output – intermediate consumption
                Value added = 20,000 – 4,990
                                         = 15010

6. What is mid-point of a class interval and how is it calculated?                                                                                              2
Ans.:-The midpoint of each class interval is called the class midpoint and is sometimes referred to as the class mark. It is the value halfway across the class interval.
The midpoint of a class interval obtained by dividing the sum of the upper and lower limits by 2 for example if the class interval is 10-20 than the midpoint will be 30/2= 15

7. If total fixed cost is R 10,980 and production is zero, find total variable cost and total cost.                                      2
Ans.:- If production is zero than total variable cost and total cost remain same as Rs. 10,980.

8. What is net indirect tax? Find net indirect tax if indirect tax is R 50 crores and subsidy is equal to R 29 crores.               2
Ans.:- Indirect taxes are basically taxes that can be passed on to another entity or individual. It is usually imposed on a manufacturer or supplier who then passes on the tax to the consumer.
Net indirect tax = indirect tax – subsidy
                                = 50 – 29 (crores)
                                = 21 (crores)

9. Give the meaning of the terms ‘market supply’ and ‘market demand’ of a commodity.                                            2
Ans.:- Market Demand:- Demand refers to how much of that  product, item, commodity, or service consumers are willing and able to purchase at a particular price.
Market Supply:- Supply pertains to how much the producers of a product or service are willing to produce can provide to the market with limited amount of resources available.

10. Calculate net national product at factor cost: 5

Rs. (in crores)
1)            Net factor income from abroad 112
2)            Consumption of fixed capital 43
3)            Indirect tax 22
4)            Subsidies 18
5)            GDP at market prices 758

11. What is meant by ‘government budget’? Distinguish between ‘plan’ and ‘non-plan’ expenditures of government.     5
Ans.:- A government budget is an annual statement presenting the revenues and spending for a financial year that is often passed by the legislature, approved by the chief executive or president and presented by the Finance Minister to the nation. The budget is also known as the Annual Financial Statement of the country.
                Distinguish between plan and non-plan expenditures of government:-
Plan Expenditures
a)      components relate to items dealing with long-term socio-economic goals as determined by the ongoing plan process.
b)      They are usually routed through central ministries to state governments for achieving certain desired objectives.
c)       In some cases, the state governments also contribute their own funds to the schemes.
Non-Plan expenditure
a)      interest payments on the loans taken by government of India.
b)      Expenditure incurred on Defence services (EXCEPT Defence Equipment which is a capital expenditure)
c)       Pensions, social services such as healthcare, education, social security etc.

12. What is a production possibility curve? With the help of a production possibility curve, explain ‘growth of resources’. 5
Ans.:- a production-possibility frontier(PPF) or production possibility curve (PPC) is a curve which shows various combinations of the amounts of two goods which can be produced within the given resources and technology/ a graphical representation showing all the possible options of output for two products that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time. A PPF illustrates several economic concepts, such as allocative efficiency, economies of scale, opportunity cost (or marginal rate of transformation), productive efficiency, and scarcity of resources (the fundamental economic problem that all societies face).
                Graphically bounding the production set for fixed input quantities, the PPF curve shows the maximum possible production level of one commodity for any given production level of the other , given the existing state of technology. By doing so, it defines productive efficiency in the context of that production set: a point on the frontier indicates efficient use of the available inputs (such as points B,D and C in the graph), a point beneath the curve (such as A) indicates inefficiency, and a point beyond the curve (such as X) indicates impossibility.

13. Write down the relation between the following :     5

a)            NDP at mp and GDP at mp

b)            GNP at mp and NNP at fc

c)             NNP at fc and national income

d)            GVA at mp and value of output

e)            NNP at fc and NDP at fc


14. Construct a demand schedule showing ‘decrease in demand’ and draw the corresponding diagram.            5

Ans.:- Decreases in demand

                Conversely, demand can decrease and cause a shift to the left of the demand curve for a number of reasons, including a fall in income, assuming a good is a normal good, a fall in the price of a substitute and a rise in the price of a complement.

                Demand schedule

For example, if the price of a substitute, such as fizzy orange, falls, then less cola is demanded at each price, as consumers switch to the substitute.































Decreases in demand are shown by a shift of the demand curve to the left.

15. State any five features of economic policies before 1990–91.

Ans.:- Five features of  economic policies before 1990-91 are:-

1.       Agriculture Based Economy:- Agriculture and allied sectors provide around 14.2% of Indian GDP while 53% of total Indian population is based on the agriculture sector.

2.       Over population:- in every decade Indian population get increased by about 20% During the 2001-11 population increased by 17.6%. currently India is adding the total population of Australia every year. India is the possessor of around 17.5% population of the whole world.

3.       Low Per Capita Income:- India’s per capita income was very less as compare to developed countries.

4.       Income Disparities:- a report released by credit Suisse revealed that the richest 1% Indians owned 53% of the country’s wealth, while the share of the top 10% was 76.30%. to put it differently, in a manner that conveys the political economy of this stunning statistic, 90% of India’s owns less than a quarter of the country’s wealth.

5.       Market Imperfections:-  Indian economy didn’t have good mobility from one place to another which hinders the optimum utilization of resources. These market imperfections create the fluctuations in the price of commodities every year.

16. Draw single vertical bar chart for the following data : 5

Number of cars sold in City A


Number of cars sold









17. Describe any four main features of Indian economy as a developing economy. 8

Ans.:- Four main features of Indian economy as a developing economy are :-

1)      Low per Capita Income:- The first important feature of the developing countries is their low per capita income. According to the World Bank estimates for the year 1995, average per capita income of the low income countries is $430 as compared to $ 24,930 of the high income countries including U.S.A., U.K.,

2)      High Growth Rate of Population:- Rate of growth of population being an important determinant of economic growth, is also responsible for slow growth of national income in India. Whatever increase in national income has been taking place, all these are eaten away by the growing population. Thus high rate of growth of population in India is retarding the growth process and is responsible for this slow growth of national income in India.

3)      Excessive Dependence on Agriculture:- Indian economy is characterized by too much dependence on agriculture and thus it is primary producing. The major share of national income that is usually coming from  the agriculture which is contributing nearly 34 percent of the total national income and engage about 66 percent of the total working population of the country. Such excessive dependence on agriculture prevents quick rise I the level of national income as well as per capita income as the agriculture is not organized on commercial basis rather it is accepted as way of life.

4)      Occupational Structure:- the peculiar occupational structure is also responsible for slow growth of national income in the country. At present about 66 percent of the working force is engaged in agriculture and allied activities, 3 percent in industry and mining and the remaining 31 percent in the tertiary sector. Moreover, prevalence of high degree of under-employment among the agricultural laborers and also among the work force engaged in other sectors is also responsible for this slow growth of national income.

18. Distinguish between ‘budget deficit’ and ‘fiscal deficit’. Give two reasons why fiscal deficit is a better measure than budgetary deficit.                 8

Ans.:- Difference between ‘budget deficit’ and ‘fiscal deficit’:-

Budget Deficit

Fiscal Deficit

It is the excess of revenue expenditure over revenue receipts.

It is the excess of total expenditure (revenue + capital) over total receipts excluding borrowings.

It signifies that government is living beyond its means even to conduct its day to day operations.

It implies total borrowing requirements of the government.

Revenue Deficit = Total Revenue Expenditure – Total revenue receipts.

Fiscal Deficit = Total expenditure – Total receipts excluding borrowings.

Fiscal deficit is a better measure than budgetary deficit this is because revenue deficit shows difference between government income and expenditure, where as fiscal deficit indicates how government is going to bridge the gap through increased taxation, reduced expenditure, additional domestic or foreign borrowings or printing money.

                If taxes are raised there is possibilities of higher inflation. If expenditure is reduced employment may fall through reduced income, if borrowings are made government has to serve interests and deficit may widen, if borrowing is incurred from foreign countries the country should have adequate foreign-exchange reserves or exports should be more.

19. (a) Explain the steps in calculation of arithmetic mean in frequency array by indirect method.    8

Ans.:- When frequency array is given it is also known as Discrete series:-

Here the mean can be found by Three Methods-

(i)                  Direct Method:- Here each frequency is multiplied by the variable, taking the total and dividing by total number of frequencies, we get X.


X = Efx/N

Where f =  frequency,

X = the value of the variable and

N = the sum of frequency or N=Ef

(ii)                Short cut Method:- Here Assumed Mean is taken and taking deviations of variable from it. We obtain X by using the following formula.

Where A = Assumed Mean

dx = (X-A);

f= frequency = total number of terms.


(b) Give any two advantages and any two disadvantages of arithmetic mean.  8

Ans.:- Advantages :- Arithmetic mean is widely used because of the following advantages

1.       It is rigidly defined. Therefore, its value is always definite.

2.       It is easy to calculate and simple to understand.

Disadvantages:- Following are the main drawbacks of arithmetic mean

1.       it is highly affected by extreme values. For example, mean of 3,5,499 is 169. In this example none of the value is represented by the mean.

2.       It cannot be determined in open end classes. For for such classes, we cannot determine middle values.

20. Explain any four long-term objectives of economic planning in India. 8

Ans.:- Four long-term objectives of economic planning in India are:-

1.       Economic Growth;- Increase in national income as well as per capita income has been the foremost objective of Indian Planning. Increase in national income and per capita income implies economic growth. For economic growth to take place,  it is necessary to produce more goods and services. It is only then the people of India will be able to enjoy a more rich and varied life. To produce more output of goods and services in the country, either a larger stock of productive capital or a larger size of the supporting services like transport, banking, communication or an increase in the efficiency of productive capital and services is required. Thus, growth refers to increase in the country’s capacity to produce more output of goods and services.

2.       Modernization:- To increase the output of goods and services, the producers in the country must adopt new technology i.e., better/modern ways of production. For example, a farmer can increase the output by using high yielding verities of seeds instead of using old/traditional ones. Similarly, a factory owner can produce more by using advanced and modern machines. Besides raising productivity levels, modernization also helps in improving the quality of products and also in lowering the cost of production. Therefore , Indian planners laid more emphasis on modernization.

3.       Self-reliance:- One of the important long term objectives of Indian planning was to attain economic self-reliance. Self-reliance implies reduction in the dependence on foreign aid or concessional foreign capital. In fact, political independence without economic independence would be incomplete and meaningless. India had to import huge amount of food grains from abroad. She had also to depend on other countries for the supply of heavy machinery, transport equipment, machine tools, electrical instrument ect. This was required for the expansion of our growing industrial sector and building strong infrastructure base in the country after independence.

4.       Increase in Employment:-  Another major objective of our plans has been better utilization of manpower resources and increasing employment opportunities. It can be regarded as a pre-condition for the elimination of poverty. Measures have been taken to provide employment to millions of people during various five year plans.  But the employment generation has not kept pace with the growth of labor force in India.



( Role of Agriculture and Industry in India’s Economic Development )

21. If a farmer produces 200 quintals of a crop on 10 hectares of land, calculate productivity of land.      2


22. What is meant by public sector? State and explain briefly any four problems faced by public sector enterprises in India.                                                                                                                    5

Ans.:- Public Sector:- The public sector is that portion of an economic system that is controlled by national, state or provincial, and local governments.

Problems faced by public sector enterprises in India are:-

1.       Inefficient Management:- It has been found that these enterprises are managed by public savants. They are not professionally qualified nor expert in the management of industrial enterprises. Public enterprises always suffer from delayed decision making .

2.       Lack of Efficiency:- They are not run on commercial principles. Their main motto is social welfare, not the profit earning. If a public enterprise in –cursed losses due to efficiency. It is overlooked. Whereas private enterprises are run for profit.

3.       Delayed Decisions:- Delayed in decision making is one of the key problems. Lack of personal interest  no one wanted to take responsibility for making decisions.

4.       Lack of Innovations:- Innovations are essential for economic development. Public enterprise lacks it due to monopoly or lack of competition. The private sector is always busy with innovating new techniques, new production methods etc.

23. State and explain any four causes for low productivity in Indian agriculture. 8

Ans.:-Four causes for low productivity in Indian agriculture are:-

1.       Rapid Growth of Population:-  The increasing pressure  of the rapid growth of population on the limited supply of cultivable land has resulted in sub-division of land holdings and unfavorable  land man ratio. Due to over crowdedness, the area of cultivated land per cultivator has declined from 0.43 hectare in 1901 to 0.20 hector now. 72% of the total land holdings in India are of the size below 2 hectares. Due to small sized holdings productivity of land is much lower compared to developed countries.

2.       Conservative Outlook of the Farmers:- Socio-economic factors like farmers’ conservative outlook, ignorance, illiteracy, superstition etc., stand in the way of adoption of modern technology in agriculture. Unless this discouraging rural atmosphere is changed, it is not possible to modernize and improve the condition of agriculture in our country.

3.       Dependence of Monsoons:- Nature still dominates agriculture in this country. It is said to be a gamble of monsoons. The rains are totally uncertain in India. Sometimes rains are insufficient or  sometimes too much of rain resulting in heavy floods both of which cause widespread damage and destruction. Even after six decades of independence, only 40% of the agricultural land has permanent irrigation facility. Other natural calamities such as hailstorm, frost or attack by pest and insects are also of common occurrence in India. All these natural factors always go against the Indian farmers in stepping pp their agricultural productivity.

4.       Condition of agricultural laborers:- Agricultural labourers are the most exploited unorganized class in the rural population of the country. From the vcery beginning landlords and Zamindars exploited these labourers for their benefit and converted some of them as slaves or bounded labourers, exploitation of these workers continues.


( Population and Economic Development )

21. If the birthrate is 26 per thousand and death rate is 8 per thousand, what is the rate of growth of population?        2


22. What is meant by sex ratio? What are the main reasons for low sex ratio in India?                                   5

Ans.:- Sex Ratio:- The proportion of males to females in a given population, usually expressed as the number of males per 100 females at a specific stage in life, especially at conception, birth and a given stage between birth and death.

India is also facing the problem with low sex ratio n i.e. 940 in 2011 census along with its neighbor south Asian countries. Thee are various factors which contributed to its low level.

1.       Social factors:- patriarchal society with more male centric thoughts force one family to have male child with old beliefs like family nomination. Lack of education makes them unable to follow right attitude towards it.

2.       Technological factors:- advent of science and technology like ultra sonography has made it possible for antenatal sex detection. It led to lowering sex ratio.

3.       Economical factors:- due to prevalent social evils like dowry daughters are considered as economic burden for family. So family prefer to have male child as earning source as well as reducing burden.

4.       Lack of awareness:- due to low contribution of female in economy of house female are not considered as important as male. That are lack of basic amenities.

23. Describe the population problem in India and elaborate any four measures taken by the government to control population growth in India.                                                                        8

Ans.:-  Four Major Population Problems of India:-

1.       Rapid Growth of Population:- We know that is spite of many attempts to check population growth, the birth rate is still high (annual exponential growth rate  is 1.64per cent as per 2011 census), but the death rate has been checked because of the development and extension of medical facilities.

2.       Disproportionate Gender Composition:- According to Census 2011, national sex ratio (female per 1,000 males) is 940. Most countries in the word have more women than men. But India and some South  Asian and East Asian countries differ. Female mortality is higher in these nations.

3.       Poor Standard of Living and Malnutrition:- Standard of living in a country is also affected by its population. In India, there is a great shortage of nourishment, especially that of balanced diet. The standard of living is low and housing conditions are often very poor which lead to health problems such as deficiency diseases.

4.       Unemployment:- The pressure of unwanted population growth increases the army of unemployed youths of employable age. Such desperate youths become a burden on the society. They may indulge in unlawful activities and cause harm to the law-abiding people.


Measures taken by the government to control population growth in India:-

1.       The drive to sterilize began in the 1970s when , encouraged by loans amounting to tens of millions of dollars from the World Bank, the Swedish International Development Authority and the UN Population Fund, India embarked on an ambitious population control programme. This program initialted under ex Prime Minister Ms. Indira Gandhi

2.       Yojana which provides a sum of money 6,000 up to 2 child only under Pradhan Mantri Matriva Vandana Yojana.

3.       There are so many more benefits which are provided up to 2 children only.

4.       Lots of awareness program has been launched for this program.    


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