Economics (214) - Oct' 2015 | NIOS SECONDARY Solved Papers

ECONOMICS (Oct’ 2015)
(214)
NIOS SECONDARY Solved Papers
Time: 3 Hours
Maximum Marks: 100


1. Private goods are those goods:
a)         Which are exclusively enjoyed by the individuals
b)         Which are available in abundance.
c)          Which are available without any discrimination.
d)         Which are free gifts of nature.
Ans.:- (a) Which are exclusively enjoyed by the individuals.
2. Freedom of enterprise is a main characteristic of:
a)         Socialist economy.                
b)         Mixed economy.
c)          Capitalist economy.                             
d)         None of the above.
Ans.:- (c) Capitalist economy.
    
3. Resource allocation in a planned economic system is based on:
a)         Principle of Profit maximization.
b)         Principle of social welfare.
c)          Combined Principle of Profit maximization and social welfare.
d)         None of the above.
Ans.:- (b) Principle of social welfare.
4. Departmental enterprises are under the control of:
a)         Foreign Production units.
b)         Private Production units.
c)          Government Production units.
d)         None of the above.
Ans.:- (c) Government Production units.
5. Cost of self supplied factors refers to:
a)         Implicit Cost             .              
b)         Fixed Cost.
c)          Variable Cost.         
d)         Explicit Cost.
Ans.:- (a) Implicit Cost.
6. When the quantity supplied of a good is more than the quantity demanded at a given price, this is the situation of :
a)         Excess Demand.    
b)         Excess Supply.
c)          Equilibrium.             
d)         None of the above.
Ans.:- (b) Excess Supply
7. Mass data in unorganised form are called:
a)         Primary data.          
b)         Secondary data.
c)          Raw data. 
d)         Array.
Ans.:- (d) Array
8. In case of cheating the consumer can get compensation by using:
a)         Right to information.                                           
b)         Right to seek Redressal.
c)          Right to be heard.                 
d)         Right to consumer education.
Ans.:- (b) Right to seek Redressal.
9. Give two examples of free goods used by you in daily life and justify why are they called free goods?             2
Ans.:- Free goods are free gift of nature such as air and sunlight. They are available in abundance i.e. in unlimited quantity and the supply is much more than the demand. We don’t have to pay anything to get them.
10. State any two of the salient features of an economy.                                              2
Ans.:- Two salient features of an economy:-
1)         Economic institutions are manmade. Thus an economy is what we make it.
2) Levels of economic activities keep on changing.

11. Why in Corporations and government enterprises generally there is the use of Capital intensive technology?          2

Ans.:- When we make more use of capital and less use of labour per unit output in the production of our commodity that is called capital intensive technology of production. This type of technology is used when the production is made on a large scale for sale in the market in order to earn profit. In corporations and government enterprises generally there is the use of capital intensive technology of production because there is large scale production of goods and services.

12. If 96 units of output are produced and the Total Fixed Cost is Rs. 360 along with a Total Variable Cost of Rs. 600. Calculate the Average Cost of Production.           2

Ans.:- Total cost = Total Fixed cost + Total Variable cost

                                = 360 + 600

                                = 960

Average cost = Total cost/total output

                                = 960/96

                                = 10       

13. How do the number of buyers buying a commodity determine the market demand for that commodity?2

Ans.:- Suppose Varsha is not the only buyer of mangoes in the market. There may be some other persons who may demand mangoes in the market. Suppose there are two other buyers Vibha and Somya who are willing to buy mangoes in the market.

The total quantity of a commodity demanded by all the individual buyers in the market at the given price at given time is called market demand of that commodity.

14. Draw a supply Curve with the help of the data given below: 2

Price (Rs. Per unit)

1

2

3

4

5

Quantity supplied (in units)

50

100

150

200

250

15. What is the ‘lack of double coincidence of wants’ in the barter system.         2

Ans.:- A common problem with the barter system is the lack of double coincidence of wants. Double coincidence of wants mean that if one wants to exchange some good with another person then the latter must also be willing to exchange his good with the first person.

16. Distinguish between a variable and an attribute.      2

Ans.:- 1) Variable are created with name, type and shape before they are assigned data values, so a variable may exist with no values.

        2) A variable may have attributes, but an attribute cannot have attributes.

17. Define Soil degradation. Give one major cause of soil degradation. 2

Ans.:- Soil degradation refers to an undesirable or deleterious change or disturbance in the quality of the soil.

Major cause of soil degradation is

Excessive use of chemical fertilizers and pesticides, which causes soil acidification, increases salinity and alkalinity of the soil.

18. Suppose you purchased a pressure cooker which bursted out when used and caused grave burn injuries on you. Explain the appropriate consumer right under which you will file your complaint.          2

Ans.:- Right to Safety:- This right provides protection against the marketing of goods that are unsafe to the health and life e.g. adulteration in food, medicines, electronics and so on.

19. Economics is being treated as ‘Science of Sustainable Development’. Explain how? 4

Ans.:- Economics is being treated as ‘Science of Sustainable Development’:- Like air, water, minerals etc. which are essential to meet our needs. If we pollute the air and water sources and deplete the non-renewable resources like coal, petroleum, natural gas etc. then future generations would suffer. The concept of sustainable development therefore emphasizes that we have no right to deny the right to life to future generations. The world’s stock of resources is not only meant for present generation but also for future generation. That is why it is our responsibility to use the environment judiciously to meet our needs of today, then bequeath them to our children and grandchildren (the future generations) so that they are able to meet their own needs as well. Sustainable development, is, therefore, a kind of development that takes into account the needs of the economy, and the environment without compromising either of the aspects.

20. Explain ‘Freedom of Enterprise’ as one of the main characteristics of a capitalist economy. 4

Ans.:- Freedom of enterprise:- In a capitalist economy the government does not coordinate production decisions of the citizens. Individuals are free to choose any occupation. Freedom of enterprise implies that business firms are free to acquire resources and use them in the production of any good or service. The firms are also free to sell their product in the markets of their choice. A worker is free to choose his/her employer. In small business units owner himself takes the risk of production and earns profit or loss for himself. But in modern corporations the shareholders take risks whereas paid directors manage business. Thus the individual supervision of one’s own capital is now no longer required to earn profit.

21. Explain the law of diminishing Marginal Product of Labour with the help of a relevant.         4

Ans.:- Law of diminishing Marginal Product of labour

 

Units of labour (L)

TP

(Units)

AP

(Units)

MP

(Units)

0

1

2

3

4

5

6

7

8

9

10

0

10

22

36

44

50

54

56

56

54

50

-

10

11

12

11

10

9

8

7

6

5

-

10

12

14

8

6

4

2

0

-2

-4

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 the market price of the commodity? Give the three important factors which influence the decision of a seller in fixing the price of a commodity.    4

Ans.:- The market price of a commodity that is quoted in the news is often the market futures price for that respective commodity. As with equity securities, a commodities futures price is determined primarily by the supply and demand for the commodity in the market.

The three important factors which influence the decision of a seller in fixing the price of a commodity

1. Pricing Objectives:- What is the objective of firm is a very important factor which helps in deciding the price. For example, if the objective of company is profit maximization then generally high price is fixed whereas the companies having the objective of sales maximization prefer low price to increase the sale and capture a big share in the market.

2. Product Cost:- The second important factor which is kept in mind while fixing the price is the cost of product or service. The price of the product must be able to cover the total cost of product. Total cost means fixed cost and variable cost. Fixed costs are fixed irrespective of production level for example, rent of factory, cost of machinery salary of permanent staff etc.

3. Extent of Competition in the Market:- The third important factor which is kept in mind while setting up the price is the level of competition firm has to face. When a firm does not face any competition then it can enjoy complete freedom in fixing the price. But when the competition is more than price is fixed keeping in mind the price of competitor’s product for example, Pepsi Company cannot fix the price of its drinks without considering the price of Coke and other cold drinks available in market.

23. Define Insurance. Distinguish between health insurance and life insurance.               4

Ans.:- Insurance can be defined as a financial product which can be purchased to partly or fully recovered any loss happening due to event beyond the control of the insured party.

Health Insurance:- Under health insurance scheme, a person who buys this insurance, can get back some amount of money out of his/her total expenditure on medical treatment. In this case also, the insurance company asks the interested person to pay a nominal amount as premium every year. Whenever the insured person falls ill and spends money on medical treatment, the insurance company gives some amount of reduce the burden of the person.

Life Insurance:- A person can buy life insurance for a particular time period. The time period could be 10 or 25 years. Every year the insured person has to pay a certain amount of premium to the insurance company. The company gives back the claim to the person after the time period is over.

24. Suppose there is only one bank in the economy and it has decided to keep Cash Reserve Ratio as 20%. Explain Stepwise the process of credit creation by this bank. Give a relevant example.                4

Ans.:- Let us think that there is only one bank in the economy.

Let the banking authority has decided that the cash reserve ratio is 20 percent. So, the bank must keep 20 percent of its current deposit in the form of cash to make cash payments to persons who come to withdraw money.

Step 1: A person called X, deposited Rs. 100 in the bank. As a result the bank’s deposits increases by Rs.100. As per rule the bank keeps 20% of 100 as cash. This comes out to be Rs. 20. So the bank keeps Rs.20 to make cash payments. Now deduct 20 from 100. 100 – 20 = 80. So the bank can use Rs.80 to give loan.

Stop 2: A person called Y approaches the bank to take a loan of Rs.80. After the bank gives this loan, it can claim the amount from Y in future. This means that by giving loan to person Y, the bank can create another deposit Rs.80.

First, person X deposited Rs. 100. By giving loan to Y, the bank is able to claim Rs. 80. So after two steps the bank has total deposit of Rs. 180. i.e. 100+80= 180.

25. State any four features of Statistics.                4

Ans.:- Four features of Statistics 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 in demand, rise in taxes, rise in wages etc.

4. Reasonable standard of accuracy:- 100% accuracy in statistics is neither possible nor desirable. What is needed and expected is only a reasonable standard of accuracy. If a doctor has invented a new medicine to control cholesterol and statistically he ascertained that 90% of patients have responded well and statistically if 95% persons responded to the treatment, it may be considered that the new medicine is good and it has reasonable standard of accuracy as the results show that only 90% of patients have responded well and not 100%. It reflects reasonable standard of accuracy.

 26. Distinguish between discrete series and continuous series.               4

Ans.:- Differences between discrete series and continuous series

Discrete Series:- This type of series is designed to show variables with definite break with their respective frequencies. Frequency refers to the repetitiveness of a value or item. If a particular value (X) appear 4 times in a set of data X will have a frequency of 4. Theoretically this kind of series is prepared only for a discrete variable. Example of discrete series:

Marks

30

40

50

60

70

80

90

Total

No. of students

4

6

10

20

10

6

4

60

Continuous Series:- This kind of series is framed for placing frequency with corresponding group of variables which are classified in groups. This kind of series may be constructed using inclusive method or exclusive method.  Example of continuous series:

X

0-10

10-20

20-30

30-40

40-50

f

7

13

20

13

7

 

27. Calculate arithmetic mean from the data given below, using short cut method:         4

Marks

0-5

5-10

10-15

15-20

20-25

25-30

No. of students

5

15

20

30

20

10

 28. Explain the land revenue system introduced by the British in India.               4

Ans.:- Agriculture was major occupation of people of India during British rule. More than 70 percent of the population was dependent on agriculture. So it was the major source of revenue for the government. The British introduced two types of land revenue, such as:

(i) Permanent settlement under which land revenue to be collected was permanently fixed.

(ii) Temporary settlement under which land revenue was changed after 25 -30 years of time.

In order to collect revenue the British appointed Zamindars in eastern part of India, Mahalwari in western part and Ryotwari in south India. These persons were called intermediaries because they used to act between British Government and common people.

29. ‘In India around 78.5 crore out of 121 crore people belong to below 35 years of age’. What does this imply? Is it a positive or negative thing for the economy? Explain.       4

30. State four reasons for the need for consumer awareness in India.    4

Ans.:- On account of the globalization and liberalisation, increase in middle income and high income population in the villages our rural markets are also expanding. So companies are reaching with their products to our rural markets as well. But the rural consumers in India are generally ignorant and illiterate. So they are exploited by the manufacturers, traders and service providers. Rural consumers face problems like fake brands, spurious products, lack warranties and guarantees, imitation, unreasonable pricing, lack of varieties and so on. There is a need for spreading consumer awareness in India.

31. Explain the factors responsible for the upward slope of the supply curve.    6

Ans.:- The following factors are responsible for upward slope of the supply curve:

(i) A rise in price of the commodity causes rise in profits, as a result firms are induced to supply more quantity of the commodity to increase profit.

(ii) A rise in price of the commodity induces the seller to dispose of at least a part of his stock. The reverse happens when there is a fall in price of the commodity,

(iii) An increase in the price of the commodity causing higher profit attracts the new firms to enter the market and this adds to the supply of the commodity leading to more quantity supplied at a higher price.

32. State any four changes in the features of Indian economy after independence. 6

Ans.:- Four changes in the features of Indian economy after independence are:-

1. Low level of per capita income:- Per capita income is calculated by dividing national income by population. Income of an individual is a major indicator of his or her standard of living. Per capita income gives the idea of income earned on an average by an individual in the economy in a year. India’s per capita income for the year 2009-10 was Rs. 33731. This comes out to be around Rs 2811 per month (i.e.33731/12=2811). This amount is very low to lead a decent life.

2. Slow growth of per capita income:- India’s per capita income is not only low but also growing very slowly. Growth refers to increase over time. Why we want our income to increase every year? There are a few reasons for it

a) First, our wants are increasing, as we grow over time.

b) Second, another reason for earning more income is that the price of goods you buy in the market are also increasing.

3. Heavy population pressure:- India’s economy is over populated. It has grown by more than three times in last 60 years. At the time of independence in 1947 the population was 350 million. According to 2011 census, India’s population stands at 1.21 billion. It is second only to China in the world and may even over take China in future. Why are we worried about high population? Very simple, More people means more mouths to eat. This implies that more food grains to be produced. This in not an easy task.

4. Existence of Poverty:- Nearly one third of world’s poor live in India. See the beggars on the streets, the slums in towns and cities, children working on the fields or in the street side dhabas or employed in houses or in factories etc. These are visuals of poverty in the country. More than 30 crores of India’s population suffer from poverty which is about 27.5 percent of the total population.

33. Explain any three points of importance of service sector in the Indian Economy.       6

Ans.:- Role and importance of service sector in the Indian Economy are:-

1. Contribution to National Income:- Among all the three sectors i.e. agriculture, industry and service, it is the service sector that has contributed maximum to the national income of India. If India’s income is 100 then service sector contributed 55.20 in the year 2009-10 which is more than half of the total.

2. Contribution to Employment:- Now a days more and more people are getting employment in service sector. Out of total employment level in the country, this sector has absorbed 29.4 percent of them in 2009-10. In times to come this figure is going to increase further. The main reason is that the number of educated people in India is increasing every year. They belong to various fields such as matriculates, graduates in arts, commerce, science, engineering, medicine and other professional and vocational streams. Service sector needs these people. In terms of wages and salaries, service sector, pays more than that of agricultural sector.

3. Attracting Funds from Foreign Countries:-  Looking at the growth of service sector of India people from foreign countries are showing more interest to invest money in this sector to earn profit. Banking, insurance, trade , transport, hotel services combined have attracted more than 1 lac 18 thousand crores rupees from foreign countries in the form of direct investment. Recently computer service has grown many fold in India. This has attracted more than forty seven thousand crores of rupees from foreign countries.

34. State:             6

                (a) any four major sources of noise pollution

                (b) any two effects of noise pollution.

Ans.:-

(a) Major sources of noise pollution include:

1. Vehicular traffic, like cars, buses, airplanes, trains etc.

2. Industrial processes like stone crushing, making of steel plates, sawing, printing, etc.

3. Construction work on roads, bridges, buildings, etc.

4. Various noises from houses like stereos, televisions, etc.

(b) Two effects of noise pollution:

1.  Noise pollution in the form of unwanted sound can damage physiological and psychological health.

2. Noise pollution can cause annoyance and aggression.

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