Economics (214) - Oct' 2014 | NIOS SECONDARY Solved Papers

ECONOMICS (Oct’ 2014)
Time: 3 Hours
Maximum Marks: 100

1. Which one of the following is a characteristic of goods?
a)         Goods cannot be transferred.
b)         Goods can be seen and touched.
c)          There is no time gap between the production and consumption of goods.
d)         Goods cannot be stored.
Ans.:- (b) Goods can be seen and touched.
2. Purchase of a cycle by a household is treated as:
a)         Capital formation.                 
b)         Production.
c)          Consumption.                        
d)         Production for self consumption.
Ans.:- (c) Consumption.

3. Rent is paid for the use of
a)         Land.                                          
b)         Labour.
c)          Capital.                                      
d)         Entrepreneurship.
Ans.:- (a) Land.
4. Marginal cost refers to:
a)         The cost which does not change with the change in amount of production of a goods.
b)         The cost which changes with the change in amount of production of a good.
c)          The cost per unit of output.
d)         Increase in total cost due to increase in one extra unit of output.
Ans.:- (d) Increase in total cost due to increase in one extra unit of output.
5. A production unit owned by a single individual is known as:
a)         A Partnership.                        
b)         A Private Company.
c)          Sole Proprietorship.                             
d)         A Public Production Unit.
Ans.:- (c) Sole Proprietorship.
6. Supply of a commodity refers to:       
a)         Quantity of the commodity offered for sale at different prices.
b)         Quantity of the commodity offered for sale at a given price at a given time.
c)          Quantity of the commodity offered for sale per unit of time.
d)         Quantity of the commodity produced by the firm.
Ans.:- (b) Quantity of the commodity offered for sale at a given price at a given time.
7. A household consumes 14 kg of sugar per week. Its average daily consumption of sugar is
a)         2 kg.            
b)         7 kg.            
c)          14 kg.         
d)         1 kg.
Ans.:- (a) 2 kg.
8. Noise pollution can cause:
a)         Coughing.                 
b)         Typhoid.
c)          Cholera.                    
d)         Hypertension.
Ans.:- (d) Hypertension.
9. ‘Wants change and expand with development’. Explain with the help of an example.        2
Ans.:- Ans.:- In ancient times, man was satisfied with simple items of food, clothing and shelter etc. But with the development these wants grew in nature and number. Our want for food we eat has changed. We want to eat not only better and nutritious food but different varieties of food. Similarly we want to wear not only a pair of clothes but we want variety as well as latest designs according to the fashion, we want to have a better house with modern facilities like, air conditioners, geysers etc.

10. State any two reasons which give rise to economic problems.            2

Ans.:- Two reasons which give rise to economic problems are

a) The resources are scarce and

b) The resources can be put to many alternative uses.

11. A seller of oranges sells 10 kg of oranges in a day. His total revenue from these oranges is Rs. 400, What is his average revenue?            2

Ans.: Average Revenue = Total revenue/ Total kg of oranges

                                                = 400/10

                                                = 40

12. Define implicit cost production. Give one example of implicit cost. 2

Ans.:- Besides purchasing factors of production and raw materials, the producer also uses his own factors and materials for producing goods and services. So, implicit cost is the cost of self supplied factors.  For example if a farmer use his own tractor for his own work that means he saves the rent of tractor it is implicit cost.

13. How will equilibrium price of a commodity be affected if market demand of the commodity is more than its supply?                2

Ans.:- When the demand for a commodity increases but its supply remains the same. An increase in the demand of the commodity will lead to increase in equilibrium price and quantity demanded and supplied of thee commodity.

14. How does the support price protect the interest of famers?                2

Ans.:- Sometimes, in order to protect the interests of producers specially farmers government fixes the minimum price of the commodity which has to be paid to the producers. This price is generally higher than the equilibrium price.

15. How is saving useful for an individual?          2

Ans.:- Suppose Mr. X saved Rs. 5000 last year. This implies that, in the beginning of the current year he starts with an extra Rs. 5000. So his income will increase by at least Rs. 5000 this year, provided his income and expenditure do not change. This means that, saving increases the future income of the person. And this saving is also helpful for Mr. X if he fall ill.

16. What is meant by an average?           2

Ans.:- An average is a value which is representative of set of data. Average is obtained by dividing the sum of the items by the number of items.

17. Write any two main sources of water pollution.        2

Ans.:- Two main sources of water pollution are

1. Discharge from sewage treatment plants and sewage pipes from cities and towns.

2. Industrial effluents released by factories into water bodies.

18. A consumer has purchased a product valuing below Rs. 20 lakhs. He feels cheated by the seller. Where he can file a complaint of this product?          2

Ans.:- For filling a complaint, the aggrieved consumer must always keep the cash memo, receipt or bill of the product he/she has purchased. The format to file a complaint is located on the booklet provided by consumer protection Act.

19. Distinguish between positive and normative economics. Give one example of each.             4

Ans.:- The study of economics involves both positive and normative aspects in terms of understanding the events taking place around us, taking decisions, prescribing rules and regulations and implementing policies to solve economic problems. Positive economics talks about “What is” where as normative economics talks about “What ought to be” or “What should be”. Positive economics talks about the things happening or might happen in the economic world. Normative economics gives value judgments about things and tells us to “What should have happened”. Consider the following statements.

Positive :- India’s population have crossed 100 crore mark. India is the second largest populated country in the world.

Normative:- India should not allow its population to grow so fast. It must control its population.

20. How does in any two ways a developed economy differ from a developing economy?            4

Ans.:- Developed economy:-

(i) Developed countries have higher national and per-capita income, high rae of capital formation i.e. high savings and investment.

(ii) They have highly educated human resources, better civic facilities, health and sanitation facilities, low birth rate, low death rate, low infant mortality etc.

Developing economy:-

(I) The national and per capita income is low in these countries.

(ii) They have backward agricultural and industrial sectors with low savings, investment and capital formation. Although these countries have export earnings but generally they export primary agricultural products.

21. State the law of diminishing marginal product of labour. What do we learn from this law?  4

Ans.:- Law of diminishing Marginal Product of labour


Units of labour (L)



















































With increase in the units of labour from 1 onwards and by one unit at each stage the value of MP increases for first 3 units of labour i.e. from 10 at L=1 to 12 at L=2 to 14 at L=3. Then the value of MP decreases for next 4 units of labour i.e. from 14 at L=3 to 8 at L=4 to 6 at L=5 to 4 at L=6 at L=7 to 0 at L=8. Finally value of MP becomes negative at L=9. In other words after increasing g temporarily for some time the marginal product of labour eventually decreases. In general way, we can say that with continuous increase in the variable factor labour, its marginal product will increase initially till certain point is reached, but after that it will decrease and may become negative, keeping all other factors unchanged. This is popularly known as the Law of diminishing Marginal Product of labour.


22. What is meant by ‘market’ in economics? State important features of a market.       4

Ans.:- ‘’Market refers to the arrangement in a given area whereby buyers and sellers come in contact with each other directly or indirectly, to buy or sells goods.”

Important features of a market are:

1. Commodity i.e. there must be a commodity which is being demanded and sold.

2. Buyer and sellers, i.e. there must be buyers and sellers of the commodity

3. Communication i.e. there must be communication between buyers and sellers.

23. How do banks create credit? Explain with the help of a numerical example.               4

Ans.:- There are two ways in which a bank create credit :-

By advancing loans on the cash credit basis or by an overdraft arrangement:

By purchasing securities and paying for them with its own cheques.

In both these cases, deposits are created (or credit is crated for the borrower), and the credit of the bank is embodied in a definite transaction. In all, a very small cash reserve is kept by the bank to meet the obligations arising out of these transactions, and the credit aggregates to a very big amount.

Let us see the actual process. Suppose a customer deposits Rs.1000 in a bank. The bank has to pay him interest, therefore the bank must seek a safe and profitable  investment for this amount. That is, it must lend it to somebody in order to earn interest. But this amount is not actually paid out to the borrowers, it is retained by the bank to meet its obligations, i.e., to pay to those of its depositors who need cash, and draw cheques for the purpose.

Suppose the bank in which a depositor has deposited Rs.1,000 keeps 20 per cent-cash reserve to meet the demand of depositors. This means that, as soon as the bank has received a deposit of Rs.1,000, it will, make up its mind to advance loans up-to the amount of Rs.5,000 (only one-fifth reserve is kept). When, therefore, a businessman comes to the bank with a request for a loan of Rs. 5,000, he may be sure of being granted accommodation to this extent, provided, of course, his credit is good.

24. State any four demerits of ‘barter system of exchange’         4

Ans.:- Four demerits of ‘barter system of exchange’

1. Double Coincidence of wants:- Under barter system, a double coincidence of wants is required for exchange. In other words, the wants of the two persons who desire to exchange goods must coincide. For example, if person A wants to acquire shoes in exchange for wheat, then he must find another person who wants wheat for shoes. Such a double coincidence of wants involves great difficulty and wastage of time in modern society.

2. Measure of Value:- Even if it is possible to have the double coincidence of wants, the absence of a common measure of value creates great problem because a lot of time is wasted to strike a bargain. Since there is no common measure in terms of which the value of a commodity can be expressed, the problem arises how much wheat should be exchanged for how many pairs of shoes.

3. Lack of division of goods:-  Certain goods are not physically divisible into small pieces. Suppose, a person possesses a cow and he wants items, such as cloth, food grains etc. Then how much of cow can be traded for cloth, how much of cow can be traded for food grains? It was very difficult to determine because, a cow cannot be divided into several pieces.

4. Problem of Transportation:- Another difficulty of barter system is that goods and services cannot be transported conveniently form one place to another. For example, it is not easy and without risk for an individual to take heaps of wheat or herd of cattle to a distant market to exchange them for other goods. With the use of money, the inconveniences or risks of transportation are removed.

25. What are data? State any three important features of data. 4

Ans.:- Data means quantitative information providing facts in an aggregate manner. The information could be on anything that can be given numerically and useful for decision making. It is also called statistical data or simply statistics.

Three important features of data are:-

1. Statistics are the aggregate of facts:- A single fact cannot be considered as statistics or data. For example, the marks secured by  a student of class X in mathematics are 95. This is given as single information which is simply a fact and not the data. However, the marks secured by all the students of class X of a school, either section wise or in total can be considered data, because it becomes an aggregate of facts.

2. Numerically expressed:- When facts are put into a framework of numbers either through counting and calculation or estimation, these may be called data. As marks of students are given in numbers.

3. Data are affected to a marked extent by multiplicity of causes:-  Data are not influenced by a single factor but are influenced by many factors. For example, rise in prices of commodities may have been due to several causes like, reduction in supply, increase iin demand, rise in taxes, rise in wages etc.

26. The following table shows wages of workers. Calculate arithmetic mean        4

Wages (Rs.)






No. of workers






27. Distinguish between primary and secondary data. Write any two sources of secondary data.  4

Ans.:- Differences between primary and secondary data:-

The data which are originally collected for the first time for the purpose of the survey are called primary data. For example facts or data collected regarding the habit of taking tea or coffee in a village by an investigator, Whereas the data which have already been collected by others, the data are called secondary data. This data is said to be primary for the agency which collects it first, and it becomes secondary for all the other users.

Sources of secondary data are:

1. Published reports of newspapers, RBI and periodicals.

2. Publication from trade associations.

28. State in any four ways the importance of international trade.                             4

Ans.:- Four Ways the importance of international trade

1. Through trade people get a lot of varieties of goods and services. During summer we would always like to have cold drinks. Some of the cold drinks available in the market are coca cola, pepsi cola etc. It was manufactured in USA which is far away from India. Now of course coca cola plants are established in India. But it is still a foreign company. Similarly Indian pickles are sold abroad in many countries by Indian business men. There are many examples of Indian goods being consumed by foreign people and foreign goods consumed by Indian people for satisfaction of wants.

2. Trade encourages production of new goods and services. Through trade sellers and buyers interact with each other. So sellers know the choice and preferences of the buyers and accordingly provide the goods and services for consumption.

3. people of different countries meet and interact through trade. Accordingly people of one country can know the culture, tradition, language etc. of another country.

4. Because of international trade it is possible to produce the goods more efficiently because it leads to specialization. This means goods can be produced at lower cost so that people will get them at lower prices.

29. What is meant by famine? Give any two reasons for occurrence of famines during British rule in India.4

Ans.:- Famine is a situation wherein many people do not get food to eat and die from hunger and diseases. Famine occurred nearly 33 times during whole British period. The most devastating famine was the Bengal famines of 1943, just four years before independence. Two reasons for occurrence of famines were as follows:

(i) Bad rainfall upsetting food grain production since irrigation facilities were not available. Agriculture was dependent on rainfall.

(ii) Poor people had not enough money to purchase food grains from the market.

30. Distinguish between renewable and non-renewable resources. Give two examples of each.   4

Ans.:- The following are the differences between renewable and non-renewable resources


Renewable resources

Non-renewable resources


Renewable is the natural resources around us, which can be used numerous times and get replenished.

Non-renewable resources were formed deep in Earth’s crust millions of years ago, hence once used they disappear forever.


Renewable resources can be used again and again.

Non-renewable resources have a limited supply and once used cannot be regained.


Renewable resources do not cause any pollution. Though when misused they can be harmful too.

When non-renewable resources are burned, they create pollution and carbon dioxide. They are not said as eco-friendly.

Examples of renewable resources are:- Sunlight, water, wind, woods, forest

Examples of non-renewable resources are:- Petrol, coal, nuclear energy, natural gas

31. How is demand for a commodity affected by:             6

                (i) Increase in price of related goods

                (ii) Decrease in income of the buyer

Ans.:- Demand for a commodity affected by:

(i) Increase in price of related goods:- The demand for a commodity is also influenced by the prices of its related goods. Related goods can be of two types: (a) substitute goods (b) complementary goods

Substitute goods are those goods which can easily be used in place of each other. Example of substitute goods are coke and pepsi, tea and coffee etc. If price of coffee increases, people will demand more of tea and thus demand for tea will increase.

On the other hand, complementary goods are those goods which are used together in satisfying a particular want. Examples of complementary goods are car and petrol, ball pen and refill etc. If we have a car, we also require petrol to run it. If price of petrol rises, demand for car will decrease.

(ii) Decrease in income of the buyer:- The demand for a commodity also depends on the income of the buyer. When our income decreases, we do not like to spend more on purchase of some goods such as fruits, full cream milk, butter etc. Such goods are normal goods. Normal goods are those goods whose demand decreases with the decrease in income. So, the demand for normal goods in directly related to the income of the buyer.

32. Explain in any three ways the role of primary sector in Indian economy.       6

Ans.:- In the primary sector agriculture is the predominance occupation and has the largest share in national income. So let us concentrate on the role and importance of agriculture the Indian economy in terms of its share in the national income, providing employment food and raw materials.

1. Share in National income:- At the time of independence agriculture was contributing more than 50 percent to national income. In recent years its share has come down. In 2009-10 agriculture contributed around 15 percent to national income.

2. Providing employment to largest section of population:- Agriculture is the mainstay of Indian economy. It is the occupation of the largest section of India’s population. At the time of independence about 70 percent of our population depended on agriculture and allied activities to earn their livelihood. With development of manufacturing and service sector dependency on agriculture has slightly reduced. About 50 percent of India’s population was working in agriculture in the year 2009-10.

3. Providing Food to Millions:- Food is the most basic requirement of life. Without agriculture food production and supply would be non-existent. India’s food requirement is not only very high but also increasing every year because of increase in its population. The total food grain production of India in 2008-9 was around 234 million tonnes. This includes wheat, rice and pulses.

33. Explain any three steps taken by the government to achieve higher economic growth in India.         6

Ans.:- Steps taken by the government for achieving higher economic growth are

1. India has been encouraging establishment of small scale, large scale and heavy industries since the second plan onwards i.e. form 1956. These industries produce goods for the use of people, machines and equipments needed to build infrastructure and help service sector o expand. Industries provide lots of jobs and higher wages.

2. The government has been encouraging the use of better inputs in the form of better seeds, fertilizers etc. to improve food grain production.

3. Because of better infrastructure in the form of roads, railway lines, Airports, communication towers, power etc. India’s service sector is growing fast.

In order to maintain the momentum of economic growth the government has modified rules and regulations so that people can easily participate in the process of development. these steps are known as economic reforms.

34. Explain any three responsibilities of a consumer.     6

Ans.:-  Consumer education is not always about rights of the consumers, but also about responsibilities and shouldering them honestly and sincerely. Let us highlight some of the issues here:-

a) Dealing with Advertisements:- Advertisements have become a part and parcel of our lives and even if we try we cannot avoid them. Companies are trying to sell their products by making attractive audiovisuals, publishing only that part which may be eye catching and hiding other crucial information and so on. Consumers need to be cautious of such deceptive and advertisements. Children are the worst victims. They need to be guided properly.

b) Buying Quality Certified Products:- There are lot of products which are certified by recognised agencies as safe to consume and good in quality. For example the Indian Standard Institute (ISI) conducts quality testing of many consumer goods. If found proper the product is labelled with ISI mark on it. For many food products the quality assurance is certified by seal called AGMARK. Consumers should choose products with ISI mark and AGMARK.

C) Demanding Bill of the Purchase:- Every consumer must demand the bill after purchase of goods and services. The bill is the proof of purchase and can be used to seek justice if the consumer feels cheated after buying the commodity. Through the bill the consumer also ensures that the government receives tax on the product because it is mandatory for the seller to mention the tax amount on the bill. Such act of the consumer makes him/her responsible citizen of the country.


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