NIOS Solved Papers: Economics (318) - Oct' 2016

1. The sum of deviations of the individual data elements from their mean is
 (A) always greater than zero     (B) always less than zero
(C) sometimes greater than and sometimes less than zero depending on the data elements
(D) Always equal to zero
Ans.:- (D) Always equal to zero
2. Price of a commodity falls from R15 per unit to R10 per unit but there is no change in its quantity demanded. Its demand is
 (A) Perfectly inelastic   (B) perfectly elastic
(C) unit elastic                  (D) more than unit elastic
Ans.:- (A) Perfectly inelastic
3. Which one of the following factors is variable in the law of supply relating to a commodity?
 (A) Prices of inputs used in production of the commodity            (B) Prices of other goods
(C) Price of the commodity                                                                          (D) Technology of production
4. What is the price elasticity of supply if the straight line supply curve cuts price axis (Y-axis) at a point above the point of origin?
(A) Less than unit elastic               (B) More than unit elastic
(C) Unit elastic                                   (D) Perfectly inelastic 1
5. Which one of the following is related to the flow concept?
(A) Money supply            (B) Population
 (C) Population growth (D) Wealth
6. Which one of the following is a final good?
(A) A machine purchased by a wholesaler            (B) Electricity used in a factory
(C) Wheat purchased by a retailer                            (D) Machine purchased for use in a factory 
7. Gross value added at market price equals
(A) Value of output – Intermediate consumption
(B) Value of output + Intermediate consumption
(C) Value of output – Intermediate consumption – Depreciation
 (D) Value of output – Intermediate consumption – Depreciation – Net indirect taxes     1
8. Value of investment multiplier is
(A) Change in investment   Change in income
(B   1– Marginal propensity to save
(C)  1 -  Marginal propensity to consume
(D)  1– Marginal propensity to consume                                1
9. Which one of the following is not an instrument of fiscal policy?
(A) Taxation                       (B) Variable reserve ratio
 (C) Public expenditure   (D) Public borrowing                     1
10. Find out the break-even point in the schedule given below : Income
 (Rs. in crore) Consumption                                         (Rs. in crore)
1,000                                                                            1,000
1,500                                                                            1,250
2,000                                                                            1,500
(A) R500 crore                   (B) R1,000 crore
(C) R1,500 crore                (D) R2,000 crore

11. Calculate median from the following frequency distribution:             3
Marks: 10 20 30 40 50 60 70 80
Number of students: 2 8 16 26 20 16 7 4
Number of students
Cumulative frequency

Median = N+1

                = 99+1  th item
                = 50th item which lies in 52 whose value is 40
Therefore median is = 40 marks.

12. What is meant by positive economics? Give two examples of positive economics.  3
Ans.:- Positive economics uses objective analysis in the study of economics. Most economists look at what has happened and what is currently happening in a given economy to form their basis of predictions for the future. This process of investigation is positive economics.
Examples, The law of demand – “if other factors remain constant, if price rises, demand declines; and if price decreases, demand inclines.”
Income isn’t equal in all Countries.

13. Price of a commodity falls from R10 per unit to R8 per unit and as a result its demand rises from 40 units to 50 units. Calculate the price elasticity of demand of the commodity.        3
                Ep=    X  P
Where P means price, Q means Quantity demand,    means change in quantity and  means change in price.
 By putting the value we gat
                   10   x     10
                     2            40
                = 100
                = 1.25

14. How is the supply of a commodity affected by increase in price of other goods? Explain.      3
Ans.:- The supply of a commodity affected by increase in price of other goods, as resources have alternative uses, the quantity supplied of a commodity depends mot only on its price, but also on the prices of other commodities. Increase in the prices of other goods makes them more profitable in comparison to the given commodity. As a result, the firm shifts its limited resources from production of the given commodity to production of other goods. For example, increase in the price of other good (say, wheat) will induce the farmer to use land for cultivation of wheat in place of the given commodity (say, rice).

15. At a given level of output, marginal cost and marginal revenue of a firm are equal. Is the firm necessarily in equilibrium? Explain.                    3
16. Explain ‘real flow’ and ‘money flow’ of income in a two-sector economy.    3
Ans.:- Real flow is the exchange of goods and services between household and firms whereas money flow is the monetary exchange between two sectors.
In real flow household sector supplies raw material, land, labour, capital and enterprise to firms and in return firms sector provides finished goods and services to household sector. Whereas in money flow, firm sector gives remuneration in the form of money to household sector a wages and salaries, rent, interest etc.

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