ECONOMICS – 2018
Part – A (Marks : 60)
1. Answer the following questions (Alternatives are to be noted) : [2×10=20]
(a) What do you mean by demand for a good?
Answer: At a fixed time and at a fixed price, the amount of commodity the consumer is ready to purchase is called demand.
Or, What is meant by an inferior good?
Answer: Inferior goods are those goods for which income effect is negative. The demand for such goods decreases when income of the consumer rises and vice versa. For example: When the income of people rises, people buy branded clothes rather than inferior quality clothes.
(b) Define own price elasticity of demand.
Answer: Other things remaining constant, the percentage change in quantity demanded of any commodity due to one percent change in price of that commodity, is called own price elasticity of demand.
(c) Give two examples of a firm’s fixed cost of production.
Answer: Two examples of fixed costs are – interest on loan taken by the firm and insurance premium.
Or, Define marginal cost of production of a firm.
Answer: Marginal cost refers to the additional cost of producing one additional unit of output. Therefore, Marginal Cost (MC) = TC(n) – TC(n-1) .
(d) Show that average revenue of any firm is always equal to the market price of the good produced by it.
Answer:
Or, Prove that marginal revenue of a firm equals zero if the magnitude of price elasticity of demand is unity.
Answer:
(e) What is meant by contractionary fiscal policy?
Answer: Contractionary fiscal policy is when the government reduce its own expenditure or increases taxes.
Or, What is government expenditure multiplier?
Answer: It is seen that change in the equilibrium level of income is a multiple of the change in the level of government expenditure on goods and services. This is known as government expenditure multiplier which is represented by 1/1-b.
(f) Mention any two disadvantages of range as a measure of dispersion.
Answer: Two disadvantages of range are:
(a) Range becomes meaningless when at least one of the two limits of the variable is infinite.
(b) Range cannot be calculated from the frequency distributions with open-end class.
(g) Mention two causes of income inequality in India.
Answer: Two causes of income inequality in India are –
(i) Inheritance law and (ii) Tax evasion.
Or, Mention any two measures adopted for the removal of poverty in India.
Answer: Following measures can be adopted for the removal of poverty in India:
(a) Jawahar Rozgar Yojana (JRY)
(b) Prime Minister’s Rozgar Yojana (PMRY)
(h) Why is life insurance called contract of assurance?
Answer: Life insurance is called a contract of assurance because in the case of life insurance the insurer gives the assurance of payment of a certain sum of money either to the insured or to the legal heir or to the nominee of the insured.
(i) What do you mean by liberalisation of foreign trade?
Answer: Liberalisation of foreign trade refers to a reduction in the control of exports and imports, free exchange of capital, labour, service etc.
Or, Mention two advantages of India as a member of World Trade Organisation.
Answer: Two advantages that India gets as a member of WTO are:
(a) Exports of agro-based industrial goods in India are likely to increase.
(b) If the export and import of services are liberalised in India, India can export labour services.
(j) Mention any two recommendations of Narasimham Committee for reform of the Indian banking sector.
Answer: Two recommendations of the Narasimham Committee are-
(i) the statutory liquidity ratio (SLR) should be reduced from 38.5% to 25% over a period of five years.
(ii) the cash reserve ratio (CRR) should be progressively reduced.
2. Answer the following questions (Alternatives are to be noted) : [5×8=40]
(a) Explain the short run law of variable proportions in the process of production.
Answer: Click here
Or, Explain the laws of returns to scale of production.
Answer: Click here
(b) Write the features of a perfectly competitive market.
Answer: Click here
Or, What is a shutdown point? Explain the circumstances under which a perfectly competitive firm reaches such a point.
Answer: Click here
(c) Briefly discuss the Ricardian theory of differential rent.
Answer: Click here
Or, What, according to Keynes, are the three motives for holding money? Explain your answer.
Answer: Click here
(d) Explain, with a diagram, the concept of circular flow of income.
Answer: Click here
Or, Discuss the various problems of measurement of national income.
Answer: Click here
(e) Describe the main functions of commercial banks.
Answer: Click here
(f) Show the distinction between balance of trade and balance of payments.
Answer: Click here
Or, What measures can be adopted to remove deficits in the balance of payments of a country?
Answer: Click here
(g) The weights of six persons (in kg) are respectively,
64, 60, 60, 64, 60 and 64.
Find the standard deviation of weights.
Answer: Click here
(h) Explain the features of different types of unemployment prevalent in India.
Answer: Click here
Or, Briefly mention the measures adopted by the government to increase employment opportunities in India.
Answer: Click here
Part – B (Marks : 20)
1. Select the correct answer from the alternatives : [1×10=10]
(i) Marginal Cost (MC) curve
(a) never slopes downwards
(b) initially slopes down and then slopes up
(c) never slopes upwards
(d) intersects the AC curve at its highest point
(ii) The first order or necessary condition for profit maximization of any firm is
(a) MR = MC
(b) MR > P
(c) MR < MC
(d) MC curve slopes down
(iii) In case of perfectly inelastic supply, the supply curve is
(a) horizontal
(b) vertical
(c) downward sloping
(d) upward rising
(iv) At the equilibrium point of a monopolist absolute value of price elasticity of demand will be
(a) equal to 1
(b) greater than 1
(c) less than 1
(d) infinity
(v) The value of investment multiplier will be
(a) 1/MPC
(b) 1/1-MPC
(c) 1/1-MPS
(d) 1/MPC+MPS
(vi) Government expenditure remaining unchanged, if tax is reduced by Rs. 1,000 and marginal propensity to consume is 3/4, then national income will increase to
(a) Rs. 1,000
(b) Rs. 2,000
(c) Rs. 3,000
(d) Rs. 4,000
(vii) If the given values of a variable are all equal to 2, then its standard deviation is
(a) negative
(b) zero
(c) positive
(d) 2
(viii) In case of disguised unemployment, marginal productivity of labour is equal to
(a) 0
(b) 1/2
(c) 1
(d) -1
(ix) What is measured by the Head Count Ratio?
(a) National Income
(b) Unemployment
(c) Poverty
(d) Inflation
(x) Economic Reforms Programme was adopted in India in the year
(a) 1975
(b) 1981
(c) 1985
(d) 1991
2. Answer the following questions (alternatives are to be noted) : [1×10=10]
(i) Write true or false : If there are losses of crops due to drought, the supply curve of an agricultural product will be downward sloping.
Answer: False.
(ii) Write true or false : There exists no difference between firm and industry in a monopoly market.
Answer: True.
(iii) Write true or false : The monopolist is a price maker.
Answer: True.
Or, Write true or false : Under monopoly price is always equal to marginal cost.
Answer: False.
(iv) Fill in the blank : In the mark-up system it is assumed that long-run industry supply curve will be …………….
Answer: horizontal.
(v) Fill in the blank : Greater is the value of Gini coefficient ………….. will be the magnitude of inequality in income distribution.
Answer: greater.
Or, Fill in the blank : The minimum value of standard deviation is ……………
Answer: zero.
(vi) Write true or false : The difference between the maximum and minimum values of a variable is called range.
Answer: True.
Or, Write true or false : If 10 is added to each value of a variable, its standard deviation will remain unchanged.
Answer: True.
(vii) Fill in the blank : Monopoly Enquiry Commission was set up in the year …………….
Answer: 1964.
(viii) Write true or false : According to Mahalanobis Committee, income inequality is greater in the urban areas than in the rural areas.
Answer: True.
Or, Write true or false : Income inequality in India has increased during the plan period.
Answer: True.
(ix) Fill in the blank : In 1993 …………………. Committee was set up for reform in the insurance sector in India.
Answer: Malhotra.
(x) Write true or false : Mahalanobis Committee was appointed for reform in India’s financial sector.
Answer: False.
Or, Write true or false : New India Assurance Company Ltd. is a private sector insurance company.
Answer: False.
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