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11 Economics Sp01
11 Economics Sp01
11 Economics Sp01
Class 11 - Economics
Maximum Marks: 80
General Instructions:
Section A
1. ________ is the root of all economic problems.
a) Abundance
b) Allocation
c) Wants
d) Scarcity
2. Sampling scheme where the units constituting the sample are selected at regular interval after selecting the very first unit
at random with equal chance is called
a) Cluster sampling
b) Stratified sampling
c) Systematic random sampling
d) Purposive sampling
3. Suppose the correlation coefficient between heights (as measured in feet) versus weight (as measured in pounds) is 0.40.
What is the correlation coefficient of height measured in inches versus weight measured in ounces? [12 inches = one
foot; 16 ounces = one pound]
a) 0.533
b) 0.40
c) 0.30
d) cannot be determined from information given
4. Continuous variable assumes _________
a) Increase in jumps
b) Both A range of values and Increase in jumps
c) None of these
d) A range of values
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5. ____ is the benchmark index for the Indian stock market.
a) Price index
OR
OR
Reason (R): Informants should be required to spend for posting the questionnaires back.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
10. Assertion (A): Special purpose tables are small in size and design to highlight a particular set of facts in simple and
analytical forms.
Reason (R): Special purpose tables are made to provide the results of the analysis in an ineffective way so that one finds
it easy to make comparisons and clear relationships.
a) Both A and R are true and R is the correct explanation of A.
OR
Find out the median of the data given below by arranging them in ascending order
X 160 150 152 161 156
Frequency 5 8 6 3 7
13. The marks obtained by 25 students in a class are as follows:
22, 28, 30, 32, 35, 37, 40, 41, 43, 44, 45, 45, 48, 49, 52, 53, 54, 56, 56, 58, 60, 62, 65, 68, 69
i. Arrange the above data in the form of a frequency distribution taking class interval. 20-29, 30-39, 40-49, 50-59, 60-
69
ii. Form the less than cumulative frequency distribution also.
14. Construct a frequency polygon without using histogram for the following data.
Wages (in Rs.) Number of Workers
0-10 10
10-20 18
20-30 35
30-40 30
40-50 20
50-60 12
60-70 8
70-80 3
OR
1-10 4
11-20 6
21-30 12
31-40 20
41-50 8
51-60 10
15. i. Write any three uses of index number especially in economics.
A 10 15 20
B 8 10 12
C 6 5 8
D 6 10 13
E 4 4 5
16. Calculate the correlation coefficient between the height of fathers in inches (X) and their sons (Y).
X 65 66 57 67 68 69 70 72
Y 67 56 65 68 72 72 69 71
17. Determine the missing frequencies when mode = 36 and total frequency is 30.
Class Interval 10-20 20-30 30-40 40-50 50-60
Frequency (f) - 5 12 - 2
OR
Calculate arithmetic mean from the following data using step deviation method.
Size 20-29 30-39 40-49 50-59 60-69
Frequency 10 8 6 4 2
Section B
18. Which of the following statements is correct?
a) Stock and supply are always equal.
b) Stock refers to the quantity which comes to market for sale.
c) Supply does not depend on government's tax policy.
d) There is difference between supply and stock.
19. A point outside the PPF indicates:
a) Fuller utilization of resources
b) Unattainable combination
c) Attainable combination
d) Under utilization of resources
OR
Which of the following illustrates a decrease in the unemployment using the PPC ?
a) A movement from a point inside the PPC to a point towards the PPC
b) A movement from a point on the PPC to a point inside the PPC
c) A movement down along the PPC
d) A rightward shift of the PPC
20. When a firm’s TR< TC, it can still cover its normal profit
a) TRUE
b) None of these
c) Can’t say
OR
OR
Reason (R): With rising in the price of a commodity total expenditure decreases and with a fall in its price total
expenditure increases.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
27. Assertion (A): Each point on the indifference curve shows one combination of two commodities.
Reason (R): Each combination offers the same level of satisfaction to the consumer.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
28. Define marginal opportunity cost along with a PPC.
29. Explain any two factors that affect Price Elasticity of Demand.
OR
Price Elasticity of Demand of a good is (-) 0.75. Calculate the percentage fall in its price that will result in 15% rise in its
demand.
30. A and B are complementary goods. Explain the effects of change in price of A on demand for B.
31. From the following schedule, find out the level of output at which the producer is in equilibrium. Give reasons for your
answer.
Output (Units) 1 2 3 4 5 6 7
Price (Rs.) 24 24 24 24 24 24 24
OR
From the following Total Cost and Total Revenue schedule of a firm, find out the level of output, using Marginal Cost
and Marginal Revenue approach, at which the firm would be in equilibrium. Give reasons for your answer.
Output (units) Total Revenue (Rs) Total Cost (Rs)
1 10 9
2 18 15
3 24 21
4 28 25
5 30 33
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32. Define a budget line. When can it shift to the right?
33. Calculate the MP of variable factor and indicate the various phases of Law of Variable Proportions from the following
schedule:
qD = 1,000 – p
qS = 700 + 2p
a. Find the equilibrium price and quantity.
b. Now suppose that the price of an input used to produce salt has increased so that the new supply curve is qs = 400 +
2p
How do the equilibrium price and quantity change? Does the change confirm to your expectation?
c. Suppose the government has imposed a tax of Rs 3 per unit of sale of salt.
OR
Class 11 - Economics
Solution
Section A
1. (d) Scarcity
Explanation: Had all resources in infinite abundance, the problems: what to produce, for whom to produce and how to
produce wouldn't have taken place.
2. (c) Systematic random sampling
Explanation: If a researcher wanted to create a systematic sample of 1,000 students at a university with an enrolled
population of 10,000, he or she would choose every tenth person from a list of all students.
3. (b) 0.40
Explanation: The formula for calculating the correlation coefficient standardizes the variables, changes in scale or units
of measurement will not affect its value.
4. (d) A range of values
Explanation: If a variable can take on any value between its minimum value and its maximum value, it is called
a continuous variable.
5. (c) Sensex
Explanation: Sensex is the short form of Bombay Stock Exchange Sensitive Index with 1978–79 as base. The value of
the sensex is with reference to this period. It is the benchmark index for the Indian stock market. It consists of 30 stocks
which represent 13 sectors of the economy and the companies listed are leaders in their respective industries.
OR
(c) Paasche’s
Explanation: Passche's Price Index is calculated by taking current year quantities as base therfore it is also called
current year quantity weight method.
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6. (d) Enumerator
Explanation: An enumerator is the person who collects data on the behalf of an investigator(an individual or an
organisation).
OR
Explanation: Here, the investigator himself visits the persons those are source of the data and collects necessary
information either through interview with the persons concerned or through observation of the data on the spot due to
which this method is costly as well as time taking.
7. (c) India has per capita income of Rs. 20,000 p.a.
Explanation: We can infer much about national income , income distribution and economic growth, given per capita
income.In case of other three options nothing can be interpreted.
8. (b) 0.78
Explanation:
X Y dX dY dX
2
dY
2
dXdY
50 22 -12 -8 144 64 96
54 25 -8 -5 64 25 40
56 34 -6 4 36 16 -24
59 28 -3 -2 9 4 6
60 26 -2 -4 4 16 8
62 (A) 30 (A) 0 0 0 0 0
61 32 -1 2 1 4 -2
65 30 3 0 9 0 0
67 28 5 -2 25 4 -10
71 34 9 4 81 16 36
71 36 9 6 81 36 54
74 40 12 10 144 100 120
2 2 2 2
√N ∑ X −(∑ X ) √N ∑ Y −(∑ Y )
12(324)−(6)(5)
= = 0.78
2 2
√12(598)−(6) √12(285)−(5)
Explanation: Prepaid postage stamps should be affixed because informants should not be required to spend for posting
the questionnaires back.
10. (c) A is true but R is false.
Explanation: Special purpose tables are small in size and design to highlight a particular set of facts in simple and
analytical forms. Special purpose tables are made to provide the results of the analysis in an effective way so that one
finds it easy to make comparisons and clear relationships.
11. This method is not affected by change in the units of measurement or by extreme values. However, it suffers from the
following limitations
i. This method also gives equal weights to all the items and thus ignores their relative importance in the group.
However, in actual practice, a few price relatives are more important than others.
ii. In this method, difficulty is faced with regard to the selection of an appropriate average. This method uses arithmetic
mean for computing average, which is not suitable for study of index numbers.
12. By observation, the modal class is 30-40, since it has maximum frequency 35.
where l is the lower limit of the modal class f is the frequency of the modal class f is the frequency of the class
1 1 0
preceding the modal class, f is the frequency of the class succeeding the modal class and i is the class interval of the
2
modal class.
f −f
∴ Mode (M o) = l1 +
1
2f −f −f
0
× c
1 0 2
35−20
= 30 + × 10
2×35−20−15
15×10
= 30 +
35
= 30 +
150
35
= 30 + 4.3
OR
Calculation of Median
X Frequency (f) Cumulative Frequency (cf)
150 8 8
152 6 14
156 7 21
160 5 26
161 3 29
Σf = 29
n+1 29+1
∴ M = Size of ( ) th item = Size of ( ) th item
2 2
Since 15 is greater than 14 and less than 21, so, the 15th item lies in cf 21, and the value corresponding to this
cumulative frequency is 156.
40-49 ||| 8
50-59 | 6
60-69 5
Total 25
ii. (a)To form cumulative frequency distribution (less than) of the given distribution, the exclusive group will be formed.
Class Interval Exclusive Group Frequency (f)
20-29 19.5-29.5 2
30-39 29.5-39.5 4
40-49 39.5-49.5 8
50-59 49.5-59.5 6
60-69 59.5-69.5 5
Total 25
(b). Cumulative frequency distribution (less than) is given below:
Class Interval Frequency Cumulative frequency (cf)
Less than 29.5 2 2
14.
OR
First of all, we have convert the given class intervals into exclusive class intervals. The steps for this conversion is given
below:
Step 1. First of all, the difference between the lower class limit of the second class and the upper class limit of the first
class is computed, i.e.,11 - 10 = 1.
2
= 0.5
Step 3. Then 0.5 is subtracted from the lower class limit and added to the upper class limit of each class to form an
exclusive distribution.
20.5-30.5 12
30.5-40.5 20
40.5-50.5 8
50.5-60.5 10
Step 4. The distribution is represented by the given histogram. On the X axis we show marks obtained and on the Y axis
number of students are shown.
(ii)
Here, we consider price relative as variable and multiply each value of the variable with the corresponding weight and
dividing the sum by the sum of weights.
p
Commodity W Price in (Rs.) (p0) 2012 Price in (Rs.) (p1) 2016 I (
p
1
× 100) IW
0
A 10 15 20 133.33 1333
B 8 10 12 120.00 960
C 6 5 8 160.00 960
D 6 10 13 130.00 780
E 4 4 5 125.00 500
ΣW = 34 ΣI W = 4533
ΣI W
P01 =
ΣW
=
4533
= 133.3 Thus, prices have increased by 33.3 percent.
34
¯¯¯¯ ΣX 534 ¯
¯¯¯ ΣY 540
= = = =
n 8 n 8
73 73 73
r = = = = = 0.438
2 2 √143.5×194 √27839 166.85
√Σ x ×Σ y
It indicates that there is low degree of positive correlation between height of fathers and sons.
17. Let the missing frequencies be x and y.
Class Interval Frequency (f)
10-20 x
20-30 5
30-40 12
40-50 y
50-60 2
n=30
Calculation of Missing Frequencies
Mode = 36 (given) Sum of frequencies=n = Σf = 30 (given)
As the value of mode is 36, so the modal class is 30-40.
f −f
∴ Mode , ( M0 ) = l1 +
1 0
× c
x+5+12+y+2=30
12−5
⇒ 36 = 30 + × 10
24−5−y
⇒ 6 =
7
× 10
∴⇒ x+5+12+7+2=30 [∵ y=7]
19−y
⇒ 6(19-y)=70 ⇒114-6y=70
∵ x=4
⇒ 6y=44 ⇒y = = 7.33 = 7
44
OR
Mid-Value (m)
d=m-A
d'm=dm/c
Σf = 30 ′
Σf d m = +10
Here, A =34.5, Σf ,
= 30 Σf d m = +10
′
, c = 10
′
Σf d m
Now, X
¯¯¯¯
= A+ × c
∑f
¯¯¯¯
10
⇒ X = 34.5 + × 10
30
100
⇒ = 34.5 + = 34.5 + 3.33
30
Explanation: The points beyond the PPF curve are unattainable combinations. These points cannot be achieved by
existing resources. Thus, any point beyond the PPF curve can be attained by increasing the supply of resources or factor
inputs or by technological innovation with respect to both the goods.
OR
(b) A movement from a point on the PPC to a point inside the PPC
Explanation: A production possibilities frontier can be used to illustrate how the unemployment or misallocation of
resources causes a society to produce fewer goods and services than possible.Points on or inside the PPF are
attainable. Production efficiency is achieved when it is impossible to produce more of one good without producing less
of some other good; i.e., no resources are being wasted.
20. (d) False
Explanation: When TR<TC, the firms profit will start declining. The firm can make normal profits when TR=TC or
MR=MC.
OR
Explanation: Perfect competition is a form of the market where there is a large number of buyers and sellers of a
commodity. how much genius product is sold and its price is determined by the force of supply and demand. An
individual buyer or seller has no control over price. Accordingly, any individual form fails to make any influence on the
price of the commodity.
21. (a) only iii
Explanation: Marginal Revenue falls twice the rate of Average Revenue.MR and AR fall with an increase in output.
Because fall in MR is double than that in AR, i.e., MR falls at a rate which is twice the rate of fall in AR.
22. (a) Money expenditure of a producer in the production process
Explanation: When production cost is expressed in terms of monetary units, it is called money cost.
23. (c) In place of each other
Explanation: Substitute goods are those goods that can satisfy the same necessity, they can be used for the same end.
24. (c) TR is maximum and constant
Explanation: When MR is zero, then TR is maximum. and after this level, the MR starts becoming negative and TR
starts falling.
25. (c) No
Explanation: When AC falls then MC will be less than AC. So AC cant be less than MC when AC is falling. This is
because when MC curve lies below the AC Curve it pulls the latter downwards.
OR
Explanation: Vertical summation is vertically adding up the values of TFC and TVC when TC, TVC and TFC are
measured on the vertical axis.
Explanation: Total expenditure goes in the same direction as the price does because with a fall in the price of a
commodity total expenditure decreases and with a rise in its price total expenditure increases.
27. (b) Both A and R are true but R is not the correct explanation of A.
Explanation: Each point on the indifference curve shows one combination of two commodities. Each combination
offers the same level of satisfaction to the consumer.
28. The slope of the production possibility curve is marginal opportunity cost or marginal rate of transformation which refers
to the additional sacrifice that a firm makes when they shift resources and technology from the production unit of one
commodity to the other commodity in an economy. It is the ratio between loss of output and gain of output when some
resources are shifted from use 1 to use- 2.
29. The two factors that affect Price Elasticity of Demand are:
i. Number of substitutes of goods: Demand for goods which have close substitutes (like tea and coffee) is relatively
more elastic, because when the price of such a good rise, the consumers have the option of shifting to its substitute.
Goods without close substitutes like wheat and salt etc are generally found to be less elastic or inelastic
in demand. Thus the availability of close substitutes makes the demand sensitive to change in prices.
ii. Proportion of income spent on the goods: Goods on which consumers spend a small proportion of their income
(toothpaste, needles etc) will have an inelastic demand i.e. when prices of such goods change, consumers continue to
purchase the almost same quantity of these goods. On the other hand, goods on which the consumers spend a large
proportion of their income (cloth, television etc) tend to have elastic demand. However, if the proportion of income
spent on a commodity is large, then demand for such a commodity will be elastic.
OR
Percentage change in quantity demanded
Ed =
Percentage change in price
15%
(−)0.75 =
percentage change in price
15
= −20%
(−)0.75
Change in price of A on demand for B can be studied with respect to the given two conditions:
i. Price of A rises If the prince of A rises, then it will result in fall in the demand of A, and therefore demand for B will
also fall. As a result, demand curve DD will shift leftwards to D2D2.
ii. Price of A falls If the price of A falls, then it will result in an increase in the demand of A, and therefore demand for
B will also increase. As a result demand curve, DD will shift rightwards to D1D1.
TC
TR (Rs.)
Profit (Rs.)
3 24 72 72 0
4 24 92 96 4
5 24 115 120 5
6 24 139 144 5
7 24 165 168 3
Equilibrium refers to a state of rest when no change is required. A firm (producer) is said to be in equilibrium when it
has no inclination to expand or to contract its output. The producer achieves equilibrium at 6 units of output. It is because
this level of output satisfies both the conditions of producer’s equilibrium:
i. The difference between TR and TC is positively maximised.
ii. Total profits fall after that level of output.
OR
1 10 8 10 8
2 18 15 8 7
3 24 21 6 6
4 28 25 4 4
5 30 33 2 8
The firm will be in equilibrium when the output is 4 units.
Px . Qx + Py . Qy = M,
Py = Price of good Y
Qx = Quantity of good X
Qy = Quantity of good Y
M = Money income.
It can shift to the right when the consumer is able to increase the consumption of both the goods. It will be possible due
to the following reasons:
i. When the level of income increases,the consumer will be able to buy more bundle of goods,which were previously
not possible.
33. Law of variable proportions occupies an important place in economic theory. This law examines the production function
with a one-factor variable, keeping the quantities of other factors fixed. In other words, it refers to the input-output
relation when output is increased by varying the quantity of one input.
Variable Factors
TP (in units)
MP (in units)
Stage
(VF) (TP) MPn = TPn - TPn-1
0 0 -
1 50 50 1st (Increasing returns to a factor)
2 110 60
3 150 40
4 180 30 2nd (Diminishing returns to a factor)
5 180 0
(a) At equilibrium
1000 - p = 700 + 2p
300 = 3 p
100 = p
p = Rs 100
= 900 units
So, the equilibrium price is Rs 100 and the equilibrium quantity is 900 units.
q's = 400 + 2p
600 = 3p
200 = p
p = Rs 200
= 800 units
The change in the equilibrium quantity is 100 units (i.e. 900 - 800 units).
Yes, this change is obvious, as due to the change in the input's price, the cost of producing salt has increased and
consequently producers will be willing to supply less, that will shift the marginal cost curve leftward and move the
supply curve to the left. A leftward shift in the supply curve results in a rise in the equilibrium price and a fall in the
equilibrium quantity.
(c) The imposition of a tax of Rs 3 per unit of salt sold will raise the cost of producing salt. Consequently, supply
decreases. This will shift the supply curve leftwards and the quantity supplied equation will become
ys = 700 + 2 (p - 3)
At equilibrium
yd = ys
1000 - p = 700 +2 (p - 3)
306 = 3p
= p
306
p = Rs 102
yd = 1000 – p
Thus, the imposition of a tax of Rs 3 per unit of salt sold will result in an increase in the price of salt from Rs 100 to Rs
102. The equilibrium quantity falls from 900 units to 898 units.
OR
1. Freedom to the firms to enter the industry: In a perfectly competitive market, firms are free to enter the industry.
There are no legal or statutory restrictions on the entry of new firms in the market. The outcome of this feature is that
all the firms in the industry are able to earn only normal profits in the long run. If, the firms are earning super normal
profits (that is, the price is greater than the minimum of LAC) then, it attracts new firms in the market. Consequently,
the total output in the industry increases and the price falls. Price continues to fall till it becomes equal to the
minimum of the LAC curve and the super-normal profits are wiped out.
2. Freedom of the firms to leave the industry: In a perfectly competitive market, firms are free to leave the industry.
There are no legal or statutory restrictions to this regard.
The outcome of this feature is that all the firms in the industry are able to earn normal profits in the long-run. If the
firms are suffering abnormal losses (that is, the price is less than the minimum of LAC) then, it leads some of the
firms to exit the market. Consequently, the total output in the industry falls and the price rises. Price continues to rise
till it becomes equal to the minimum of the LAC curve and the abnormal losses are wiped out.