NIOS Solved Papers: Economics (214) - April' 2015 (Old Course)

Class 10th
Day and Date of Examination …………………………………………………………………
Signature of Invigilators 1. ……………………………………
2. ……………………………………
General Instructions :
[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. Distinguish between consumer services and producer services.            2
Ans.:- When services are used directly by consumers to satisfy their wants, they are called consumer services. When services are used by producers to produce other goods and services, they are called producer services.

2. Why does an economic problem arise?                  2
Ans.:- Economic problems arises because of the scarcity of resources and resources have their alternative uses. An economic problem is basically the problem of choice which arises because of scarcity of resources. Human wants are unlimited but means to satisfy them are limited.
3. State any two changes that an economy experience with economic development.                                    2
Ans.:- The following are the changes that an economy experience with economic development:-
GDP increases:-  The gross domestic product is the economic value of a country’s output of goods and services and indicates the strength of its economy. A higher GDP per capital is a sign of a more sophisticated stage of economic development.
Poverty rate declines:- as a country’s GDP per capita grows, the poverty rate declines. People earn more money, become more prosperous and being to accumulate wealth.
4. Show under utilization of resources with the help of a production possibility curve.                                                 2
Ans.:- In an economy, if national resources are not fully utilized, then the total output in the economy will be less than the potential output.

In the diagram above, any point such as E,F inside the curve AB shows under utilization of the available, resources. In this situation, the actual output is less than the potential output. For example, in India, labour is under-utilized or less than fully employed, therefore mass unemployment.
5. Explain the role of statistical data in construction of economic theories.               2
Ans.:-  In the construction of Economic theories, the statistical data is applied for the construction of economy by identifying its problems, in evaluating the policies of the government and planning  for the future going through the economic variables and last but not least to level up the structure of the economy.
6. Who generates factor income?                   2
Ans.:- Factor income is income received from the factors of production- land, labor, and capital. Factor income on the use of land is called rent, income generated from labor is called wages, and income generated from capital is called profit.
7. State any two precautions which must be taken while estimating national income by income method.           2
Ans.:- Two precautions which must be taken while estimating national income by income method are:-
Transfer of payments should not be includes as there is no value addition in the economy.
Capital gains from sale of old goods should not be included. Commission etc of brokers on sale of old goods should be included as these are reward for rendering factor services.
8. How are national income estimates used as an indicator of success or failure of planning?  2
Ans.:- National income as an indicator of success or failure of planning – if a country has adopted planning as a means of economic growth then national income data can help in assessing the achievements of planning or vice versa.
9. State two necessary conditions for maximization of profit according to marginal revenue and marginal cost approach.            2
Ans.:- The profit Maximization Rule states that if a firm chooses to maximize its profits, it must choose that level of output where Marginal Cost (MC) is equal to Marginal Revenue (MR) and the marginal cost curve is rising. In other worlds, it must produce at a level where MC = MR.
10. Explain the central problem ‘How to Produce’ with the help of an example.              5
Ans.:- How to produce:- This studies how to organize production. It is the second basic economic problem of resource allocation. It is concerned with the choice of technique production. For example, production of cloth is possible either by handlooms or by modern machines.
This problem is concerned with the efficient use of resources which implies more production with low cost. Thus, one needs to decide the efficient technique of production which uses the least amount of scarce resources to provide the same amount of output.

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