Subject: Economics

Class: 8 O

Paper: 1

Time: 1 hour

T. Marks: 30
Encircle the Correct Answer for the following statements
1: A government decides to switch reliance from direct to indirect taxes.
As a result of this decision, which tax is likely to reduce and which is likely
to rise?
Decrease
(a)
(b)
(c)
(d)

Increase

Customs duties
Excise duties
Income tax
Licenses

Cpaital gains tax

corporate tax
VAT
inheritance tax

2: A government wants to redistribute income from the rich to the poor.

Which changes in taxation would help it to achieve this objective?
(a) A cut in corporate tax and a rise in sales tax
(b) A cut in VAT and a rise in income tax
(c) A cut in capital gains tax and inheritance tax
(d) A rise in customs duties and excise duties.
3: in which circumstance will the greatest amount of the tax be borne by
the consumer?
(a) Elastic
(b) Inelastic
(c) Inelastic
(d) Elastic

inelastic
elastic
elastic
inelastic

4: Which of the following is a direct tax?

(a) Excise duty on petrol
(b) Inheritance tax
(c) Sales tax
(d) Tarif
5: What is meant by a regressive tax?
(a) A
(b) A
(c) A
(d) A

tax
tax
tax
tax

that
that
that
that

falls in line with inflation

reduces government revenue over time
places a greater burden on the poor than the rich.
is replaced by one which generates more income.

6: Which of the following is an advantage, a small firm may have over a

large firm?

(a) It
(b) It
(c) It
(d) It

can
can
can
can

adapt more quickly to changes in demand

raise finance more easily.
hire specialist staf.
spread its risks.

7: what is most likely to be supplied by small firms?

(a)
(b)
(c)
(d)

banking
film production
shoe repair
steel

8: A toy manufacturer merges with a chemical company. What type of

integration is this?
(a) Conglomerate
(b) Horizontal
(c) vertical integration backward
(d) Vertical integration forward
9: What is meant by internal economies of scale?
(a) A
(b) A
(c) A
(d) A

fall
fall
fall
fall

in
in
in
in

short run average costs arising from the growth of a firm.

long run average costs arising from the growth of a firm.
short run average costs arising from the growth of an industry.
long run average costs arising from the growth of an industry.

10: What is meant by financial economies of scale?

(a) Lower average costs experienced by large banks and other financial
institutions.
(b) Lower average costs arising from a large firm operating its finance
department more efficiently.
(c) Lower average costs due to the ability of large firms to borrow more cheaply
(d) Lower average costs occurring because of the use of larger capital
equipment.
11: What are the three questions faced by all economies?
(a) What to produce, when to produce it and who receives it.
(b) What to produce, how to produce it and who receives it.
(c) Where to produce, how to produce and when to produce.
(d) Where to produce, when to produce and how to produce.
12: How are resources allocated in a market economy?
(a) By
(b) By
(c) By
(d) By

directives
the price mechanism
directives or the price mechanism
directives and the price mechanism

13: what is the relationship between demand and price and the
relationship between supply and price?

(a)
(b)
(c)
(d)

Demand and price

supply and price

Directly related
Directly related
Inversely related
Inversely related

directly related
inversely related
directly related
inversely related

14: What happens to peoples willingness and ability to buy a product

when its price falls?
Willingness
(a)
(b)
(c)
(d)

Increases
Increases
Decreases
Decreases

Ability
increases
decreases
decreases
increases

15: What could explain this change?

(a) A
(b) A
(c) A
(d) A

rise in the price of cofee

rise in the price of tea
successful advertising campaign for tea
health report indicating that drinking cofee can cause headaches.

16: An increase in demand is represented by:

(a) A
(b) A
(c) A
(d) A

movement down the demand curve

movement up the demand curve
shift to the left of demand curve.
shift to the right of the demand curve.

17: how would an increase in supply be illustrated?

(a) A
(b) A
(c) A
(d) A

movement up the supply curve

movement down the supply curve
shift to the left of the supply curve
shift to the right of the supply curve

18: What would cause an increase in the supply of milk?

(a) An increase in the rice of cattle feed.
(b) An increase in wages paid to farm workers.
(c) The introduction of a subsidy to cattle farmers.
(d) The outbreak of disease afecting cows.
19: what is price elasticity of demand?
(a) A measure
changes.
(b) A measure
changes.
(c) A measure
(d) A measure

of the extent to which price changes when the quantity demanded

of the extent to which the quantity demanded changes when price
of the extent to which total revenue changes when price changes.
of the extent to which price changes when total revenue changes.

20: Demand for a product is inelastic. What effect will a fall in price have?
(a) Demand will not change
(b) Demand will change by a greater percentage.
(c) Total revenue will fall.
(d) Total revenue will rise.
21: in what circumstances would supply of a product be elastic?
(a) It
(b) It
(c) It
(d) It

is costly to produce
takes time to produce
can be stored
uses resources which are in short supply.

22: What encourages firms to produce what consumers demand?

(a) The
(b) The
(c) The
(d) The

chance to earn a high profit

chance to experience high unit costs of production
desire to attract new firms into the industry
desire to keep revenue as low as possible

23: Why does scarcity continue to be a problem in the future?

(a) Prices will rise
(b) They quantity of resources will decline.
(c) Wants will continue to increase
(d) World population will fall.
24: Which factor of production is the most mobile?
(a) Capital
(b) Enterprise
(c) Labour
(d) Land
25: A country produces 3,000 new capital goods in a week, 500 of these
replace worn out goods. What is the nest investment made?
(a) 500
(b) 2,500
(c) 3,0000
(d) 3,500
26: Which of the following is a free good?
(a) Inoculation provided without charge by the state
(b) Prizes of food items given away by a supermarket
(c) Recycled paper
(d) Wind coming in from the sea
27: a man presently works as a builder. His previous jobs included working
as a farm labourer and a street trader. His nest bet-paid job is that of a
carpenter but he would rather choose to work as a gardener, if not a

builder. What will be the opportunity cost of him working as builder?

Working as:
(a) Carpenter
(b) A farm labourer
(c) A gardener
(d) A street trader
28: what is a cause of market failure?
(a) Competition between firms
(b) Consumers lacking information about where the lowest prices can be found.
(c) Diferences in pay between skill and unskilled workers.
(d) Resources being both geographically and occupationally mobile
30: Which type of goods would be over-produced if left to market forces?
(a) Basics necessities
(b) Capital goods
(c) Demerit goods
(d) Public goods

Subject: Economics
Paper: 2
T. Marks: 70

Class: 8 O
Time: 1 hour

Note: Section A is compulsory and attempt any two questions from Section
B.

Section A
India has a long tradition of government planning but the degree of
government intervention in the economy has been reduced in the last two
decades. Presently India is a mixed economy and moving towards free
market economy, where Privatization started in 1991, with the creation and
sale of a small number of shares in some SOEs (state-owned enterprises).
This process speeded up in the first decade of the 2000s. In 2004, for
instance, the Indian government sold of some of its shares in the Oil and
National Gas Corporation and some shares in the airports of Delhi and
Mumbai, hoping that this would stimulate more investment and greater
efficiency. This privatization has been opposed by the communist parties of
India which argue that firms perform better in the public sector. India wants
to keep itself a powerful country for this purpose it signed many contracts of
purchasing latest missiles technology to keep its boundaries safe and free of
any external threats.
Q1: (a):What is meant by privatization? [3]
(b):

Explain one reason for better performance of a firm when:

It is in the private sector
It is in the public sector

(c):

[4]

Give a detailed note on advantages and disadvantages to India of becoming a

free market
economy. [12]
(d):

Explain with the help of a diagram and diferent combinations of missiles and

IT industry
products at production possibility curve it. [10]

(e):

Give one disadvantage to Indian economy of investing greater on weapons

than IT industry. [1]

PTO

Section B:
Question 2: (a): With the help of demand and supply schedule and diagram
explain equilibrium
price and quantity. [10]
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(b): What are the factors that can afect the supply of a product? [6]
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(c): explain with the help of a formula the concept of price elasticity of demand. [4]
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Question 3: (a): Explain the factors that influence the size of a firm. [4]
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(b): Briefly explain with the help of examples the concepts of
i.
Vertical integration forward
ii.
Conglomerate integration
Vertical integration backward. [6]
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(c): Give a detailed note on the advantages of small firms. [10]

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Question 4: what are diferent types of internal economies of scale? [10]

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(b): briefly explain any four types of direct taxes.[4]

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(c): What are diferent qualities of a good tax? [6]

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