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


NIOS SOLVED PAPERS
OCTOBER’ 2017
ECONOMICS
(318)
1. What type of correlation is expected between heights and weights of students?
(a) Positive         (b) Negative       (c) Infinite           (d) None
2. Positive economics deals with the economic phenomenon:
(a) What is          (b) what ought to be      (c) Individual behaviour                      (d) Economy’s behaviour
3. Ordinal utility analysis was developed by:
(a) Marshall        (b) Hicks               (c) Robbins         (d) Samuelson
4. X and Y are complementary goods. When the price of X rises, demand for Y.
(a) Rises               (b) Falls                                (c) Remain unchanged      (d) Is uncertain
5. As output increases, average variable cost:
(a) Increases      (b) Decreases    (c) Remain unchanged   (d) Initially falls, then rises.
6. Different forms of market are distinguish on the basis of :
(a) No of firm     (b) Ease of entry and exit of firms   (c) Product differentiation  (d) All the above
7. To arrive at ‘domestic product at market price’ from ‘domestic product at factor cost’. The following adjustment is made:
(a) Add subsidies to and subtract indirect taxes from domestic product at Factor cost.
(b) Add indirect taxes to and subtract subsidies from Domestic Product at Factor cost.
(c) Add both subsidies and indirect taxes from Domestic Product at Factor cost.
(d) Subtract both subsidies and indirect taxes from Domestic Factor cost.
8. Transportation of product is a part of:
(a) Primary sector            (b) Secondary sector      (c) Tertiary sector            (d) Government sector.
9. The sum of marginal propensity of consume and marginal propensity to save is :
(a) Zero                                (b) One                                (c) Less than one but greater than Zero (d) Greater than one.
10. Borrowings by government is :
(a) Revenue receipts      (b) Capital receipts          (c) Neither Capital receipt nor revenue receipt
(d) Capital receipt if borrowings are from abroad, all other borrowing are revenue receipts.

11. Distinguish between median and mode.       3
Ans.:- The following are the differences between median and mode:-
Basis
Median
Mode
1.       Meaning
Median is the value of the variable which divides the series into two equal parts.
Mode is the most common value. It occurs most frequently in the series.
2.       Calculation
It is easy calculate and simple to understand.
It is difficult to calculate. It cannot be determined  in case of multimodal distributions.
3.       Impact of Extreme values
It is not affected by extreme values (i.e. very large and very small values).
It is also not affected by extreme values, because it depends only on the largest frequency.

12. Explain the Concept of microeconomics. Give one example.                               3
Ans.:- Microeconomics is the study of individuals, households and firms’ behaviour in decision making and allocation of resources. It generally applies to markets of goods and services and deals with individual and economic issues.
Example of microeconomics –  the study of how individual or individual businesses allocate resources.

13. State any three assumptions on the basis of which production possibilities are demanded.                3
Ans.:- Three assumptions n the basis of which production possibilities are demanded are:-
(i)      Only two goods X (consumer goods) and Y (capital good) are produced in different proportions in the economy.
(ii)    The same resources can be used to produce either or both of the two gods and can be shifted freely between them.
(iii)   The supplies of factors are fixed.

14. Explain ‘interdependence between the firms’ feature of oligopoly.                                3
Ans.:- Interdependence between the firms:- It is one of the most important feature of an Oligopoly market, wherein, the seller has to be cautious with respect to any action taken by the completing firms. Since there are few sellers in the market, if any firm makes the change in the price or promotional scheme, all other firms in the industry have to comply with it , to remain in the competition.
Thus very firm remains alert to the actions of others and plan their counterattack beforehand, to escape the turmoil. Hence, there is a complete interdependence among the sellers with respect to their price-output policies.

15. Explain the meaning of excess supply and its effect on price.             3
Ans.:- In economics, an excess supply or economic surplus is a situation in which the quantity of a good or service supplied is more than the quantity demanded, and the price  is above the equilibrium level determined by supply and demand. That is, the quantity of the product that producers wish to sell exceeds the quantity that potential buyers are willing to buy at prevailing price.

16. Explain meaning of mixed income of self-employed.             3
Ans.:- The remuneration of the self-employed is treated as mixed income. It is defined as the income that is received, over a given reference period, by individuals, for themselves or in respect of their family members, as a result of their current or former involvement in self-employment jobs.
                For purposes of measurement of income related to self-employment, the self-employed are primarily the sole owners, or joint owners, of the unincorporated household enterprises in which they work, according to the definition provided in the system of National Accounts.
 
17. Calculate Marginal propensity to consume from the following
(i) Increase in national income =  Rs. 1000 crore                (ii) Increase in investment = Rs. 100 crore            3

18. Define average propensity to consume and average propensity to save. State the relation between the two.  3
Ans.:- The average propensity to consume (APC) expresses the percentage of income consumed at any given level of income. In other words, it’s the amount of income on goods and services.
The average propensity to save (APS) is an economic term that refer to the proportion of income that is saved rather than spent on goods and services. Also known as the savings ratio, it is usually expressed as a percentage of total household disposable income.
Relation between APC and APS
The sum of the Average Propensity to Consume (APC) and Average Propensity to Save (APS) is always equal to unity, i.e., APC + APS = 1. It is so because the money income can either be spent on consumption or it can be saved.

19. What is autonomous investment? Represent the same on a diagram.   3
Ans.:- The Autonomous Investment is the capital investment which is independent of the economy shifts. This means, any change in the cost of raw material or any change in the salary and wages of labour etc. has no effect on the autonomous investment.
The autonomous investment is made for the welfare of the society and not for generating profits out of such investments. These investments are independent of the level of income or profit, and hence, any change in the income or profit level will have no effect on the autonomous investment. This can be shown in the figure below:



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