NIOS Solved Papers: Economics (318) - April' 2017

APRIL’ 2017

1. The coefficient of correlation cannot be
 (A) 0 (B) 1 (C) greater than 1 (D) -1                                                                                                                          1
2. Central problems arise
 (A) only in underdeveloped economies
(B) only in mixed economies
(C) only in developing economies
 (D) in all economies                                                                                                                                                       1
3. Demand curve of a commodity shifts to the left when (A) its price rises (B) its price falls (C) price of substitute goods falls (D) price of complementary goods falls 1
4. As output is increased, the difference between average total cost and average variable cost (A) decreases (B) increases (C) remains constant (D) first increases and then decreases 1
5. Which of the following can have a negative value? (A) Marginal physical product (B) Average physical product (C) Total physical product (D) None of the above 1
6. Average revenue and marginal revenue are always equal under (A) perfect competition (B) monopoly (C) monopolistic competition (D) all forms of market 1
7. Compensation of employees does not include (A) bonus (B) employer’s contribution to social security (C) gifts (D) free accommodation 1
8. Which of the following is a factor income? (A) Taxes (B) Fines (C) Profits (D) Donations 1
9. Change in bank rate is made by (A) Central Bank (B) Government (C) Commercial Banks (D) Prime Minister 1
10. Which of the following is not a function of money? (A) Medium of exchange (B) Control rising prices (C) Store of value (D) Measure of value 1
11. Explain any three main properties of arithmetic mean.                                                                          3
Ans.:- Following are the properties of arithmetic mean:-
a. The sum of the deviations of the items in a series form their arithmetic mean is zero.
b.The sum of the square of the deviations of the items from their A.M. is minimum.
c. If each value of the series is replaced by the mean, the sum of their substitutions equals the sum of individual values.

12. Describe the problem of ‘how to produce’.                                                                                                  3
Ans.:- The problem of ‘how to produce’ is a problem relating to choice of techniques. Broadly, it is the problem of deciding the techniques of production which are to be used.
Which are to be used.
There are two types of techniques of production, which are as follows:
(i)      Labour intensive technique it is that technique in which labour is used more than capital.
(ii)    Capital intensive technique it is that technique in which capital is used more than labour.

13. Give the meanings of micro- and macro-economics.                                                                                               3
Ans.:- Micro Economics talks about the actions of an individuals unit, i.e. an individual, firm, household, market, industry, etc. on the other hand,, the 
Macro Economics studies the economy as a whole, i.e. it assesses not a single unit but the combination of all i.e. firms, households, nation, industries, market, etc.

14. State the law of demand and its two exceptions.                                                                                      3
Ans.:- The law of demand states that, other ting remaining the same, the quantity demanded of a commodity is inversely related to its price.
Exceptions of law of demand are
a.       Inferior goods
b.      Giffen goods.

15. State any three properties of indifference curve.                                                                                     3
Ans.:- Three properties of indifference curve are:-
a. Indifference curves are downward sloping,
b.Higher Indifference curve are preferred to lower ones,
c. Indifference curves cannot intersect.

16. Explain the effect of improvement in the technology of production of a commodity on its supply.                                                                                                                                                                                    3
Ans.:- Effect of improvement in the technology of production  of a commodity on its supply:- Technology changes influence the supply of a commodity. Advanced and improved technology reduces the cost of production, which raises the profit margin. It induces the seller to increase the supply. However, technology degradation or complex and out-dated technology will increase the cost of production and it will lead to decrease in supply.

17. At a price of R10 per unit the demand of a commodity is 200 units. Its price elasticity of demand is  (-)1 5. At what price will the demand be 250 units?                                                                  3
                Given P = 10, Q = 200, ∆Q = ?, ∆Q = 50 and price elasticity =  -1.5
Here P = Price, Q = Quantity, ∆P= Change in price, ∆Q= Change in quantity
Let the Change in price be A.

                ep =   ∆Q/∆Q  X P/Q

                -1.5 = 50/A x 10/200
                1-.5 = 500/200A
                -350A = 500
                A = 500/-300
                A = -1.67
Therefore the price will be 10 + - 1.67 = 8

18. Distinguish between real and nominal gross domestic products.                                                       3
Ans.:- The following are the differences between real and nominal gross domestic products:-
Nominal GDP
Real GDP
1.       Meaning
The aggregate market value of the economic output produced in a year within the boundaries of the country is known as Nominal GDP.
Real GDP refers to the value of economic output produced in a given period, adjusted according to the changes in the general price level.
2.       What is it?
GDP without the effect of inflation.
Inflation adjusted GDP
3.       Expressed in
Current year prices
Base year prices or constant prices.

19. Calculate consumption expenditure from the following data :                                                           3
 Income 3000 Marginal propensity to consume 0·8 Autonomous consumption 200

20. Which of the following can have a negative value? Give reasons for your answers :                                3

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