Class 11 – Economics Sample Paper – 01 (2024-25)
Maximum Marks: 80
Time Allowed: 3 hours
General Instructions:
- This question paper contains two sections: Section A (Microeconomics) and Section B (Statistics).
- The paper contains 20 Multiple Choice Questions (MCQs), 4 Short Answer Questions of 3 marks, 6 Short Answer Questions of 4 marks, and 4 Long Answer Questions of 6 marks.
- All questions are compulsory.
Section A: Microeconomics
1. Assertion (A): Statistics cannot calculate the qualitative aspects of economics.
Reason (R): Qualitative aspects are the aspects that influence the working of an economy, though they cannot be expressed in terms of money.
Answer: a) Both A and R are true and R is the correct explanation of A.
2. Formula for calculating price index is:
- a) Price index = P1/P0 * 100
- b) IIP01 = ∑(q1q0) P / ∑P
- c) None of these
- d) IIP01 = ∑(q1q0) P / ∑W
Answer: a) Price index = P1/P0 * 100
3. If the coefficient correlation exactly equals to -1 then it will be:
- a) Negative correlation
- b) Simple correlation
- c) Positive correlation
- d) Multiple correlation
Answer: a) Negative correlation
4. Taking 1999 as the base year, calculate the index number of the year 2000:
Year: 1999 | 2000 | 2001 | 2002 | 2003 | 2004
Price (Rs): 10 | 14 | 16 | 20 | 22 | 24
- a) 160
- b) 130
- c) 140
- d) 150
Answer: b) 130
5. Which of the following index numbers is based on the assumption that all the commodities are of equal importance?
- a) Weighted index number and Simple index number
- b) Simple index number
- c) None of the given
- d) Weighted index number
Answer: b) Simple index number
6. Which of the following plays an important role in the construction of index numbers?
- a) Current year price
- b) All of these
- c) Base year price
- d) Weights
Answer: b) All of these
7. The scope of statistics extends to:
- a) Government
- b) All of these
- c) Economics
- d) Industry
Answer: b) All of these
8. The total expenditure incurred by an industry under different heads is best presented by:
- a) Histogram
- b) Compound graph
- c) Line graph
- d) Component Bar Diagram
Answer: d) Component Bar Diagram
9. A composite price index based on the prices of a group of items is known as the:
- a) Laspeyres Index
- b) CPI
- c) Paasche Index
- d) Aggregate price index
Answer: d) Aggregate price index
10. Calculate the correlation coefficient between x and y and comment on their relationship:
X: 3, 2, 1, 1, 2, 3
Y: 9, 4, 1, 1, 4, 9
- a) 0.47
- b) 0.25
- c) 0.0
- d) 0.99
Answer: d) 0.99
Section B: Statistics
21. Supply curve shifts forward due to:
- a) Decrease in price of competing product
- b) Decrease in factor price
- c) Increase of firms in the market
- d) All of these
Answer: d) All of these
22. If many people die due to an earthquake, it will shift the country’s PPC to the:
- a) Right
- b) Left
- c) Not affected
- d) Can’t say
Answer: b) Left
23. When will increase in supply bring down the price, leaving the quantity demanded unchanged?
- a) When demand for the commodity is perfectly inelastic
- b) When demand for the commodity is less elastic
- c) When demand for the commodity is perfectly elastic
- d) When demand for the commodity is more elastic
Answer: a) When demand for the commodity is perfectly inelastic
24. The relationship between TR and MR when price is constant:
- a) MR will be constant but TR is a positively sloped straight line
- b) The values are the same
- c) The values decrease
- d) The values increase
Answer: a) MR will be constant but TR is a positively sloped straight line
25. TC increases at an increasing rate when MC is:
- a) Negative
- b) Constant
- c) Increasing
- d) Decreasing
Answer: c) Increasing
26. Assertion (A): The demand curve of the complementary good shifts to the right.
Reason (R): Greater purchase of a commodity at its constant price points to a situation of increase in demand or a forward shift in the demand curve.
- 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.
Answer: a) Both A and R are true and R is the correct explanation of A.
Economics Answers
1. Three reasons which give rise to an economic problem
The economic problem arises due to the following reasons:
1. Scarcity of Resources: The basic economic problem stems from the fact that resources (land, labor, capital) are limited while human wants are virtually unlimited. This scarcity forces economies to make choices regarding the allocation of these resources.
2. Unlimited Wants: Human wants are unlimited and ever-growing, but the means to satisfy them are limited. Therefore, an economy must decide what goods and services should be produced, how to produce them, and for whom they should be produced.
3. Choice and Opportunity Cost: Due to limited resources, every choice involves an opportunity cost, which is the next best alternative foregone. This forces individuals and societies to make decisions about the optimal allocation of resources.
2. The Three Central Problems of an Economy
The three central problems of an economy are:
1. What to Produce? Deciding which goods and services to produce with limited resources. Since resources are limited, an economy must prioritize certain goods and services over others.
2. How to Produce? Determining the methods of production, such as labor-intensive vs. capital-intensive methods, which directly affect efficiency and cost.
3. For Whom to Produce? Deciding the distribution of goods and services among the population. This involves determining who will receive the produced goods based on factors like income, wealth, and need.
3. Conditions for a Profit-Maximizing Firm in a Competitive Market
In a perfectly competitive market, a firm will produce positive output and maximize profits under the following conditions:
1. Marginal Cost (MC) Equals Marginal Revenue (MR): The firm will produce up to the point where the marginal cost of producing one more unit of output equals the marginal revenue it gains from selling that unit.
2. Price Equals Marginal Cost (P = MC): In a competitive market, firms are price takers, meaning the price of the good is determined by the market, and the firm produces where the price equals marginal cost.
3. Normal Profit: The firm must cover all its costs, including the opportunity cost of capital, to remain in the market. If price is above average total cost (ATC), the firm will earn a profit, and if price equals ATC, it will make normal profit.
4. Why should diamonds be priced high and water low despite water being essential to life while diamonds are not?
Diamonds are priced high because of their rarity and scarcity. They are not produced in large quantities and require significant effort and cost to extract, which makes them more expensive.
Water, on the other hand, is abundant in nature and is widely available at low costs. While it is essential for life, it is usually not scarce enough to command high prices. In economics, prices are determined by marginal utility, and while water has high total utility, its marginal utility is low because it is abundantly available.
5. Conditions for Producer’s Equilibrium (Schedule Method)
A producer’s equilibrium occurs when the firm maximizes its profit. This is achieved when:
1. Marginal Cost (MC) = Marginal Revenue (MR): The firm should produce the quantity of output where the additional cost of producing one more unit is equal to the additional revenue gained from selling that unit.
2. Marginal Cost Curve is Rising: The MC curve should be rising at the equilibrium point, indicating that the firm is at the point of diminishing returns.
6. Is a Producer in Equilibrium Under the Following Situations?
1. When Marginal Revenue (MR) is Greater Than Marginal Cost (MC)
No, the producer is not in equilibrium. In this situation, the firm should increase production to maximize profit until MR = MC.
2. When Marginal Revenue (MR) is Equal to Marginal Cost (MC)
Yes, the producer is in equilibrium. This is the point where profit is maximized, and no further increase in output is beneficial.
7. Demand of a Commodity is Inversely Related to its Price (Utility Analysis)
According to the law of demand, as the price of a good falls, the quantity demanded rises, and vice versa, all else being equal. This inverse relationship can be explained through utility analysis:
– Total Utility: As consumers consume more of a good, total utility increases.
– Marginal Utility: The additional satisfaction or utility gained from consuming an additional unit decreases with more consumption.
– As the price of the good decreases, consumers are willing to buy more of it because the marginal utility of the good is greater than the price they must pay for the additional unit.
8. Law of Variable Proportions (Diagram/Schedule)
The law of variable proportions states that as more units of a variable factor (e.g., labor) are added to a fixed factor (e.g., capital), the total output will initially increase at an increasing rate, then at a decreasing rate, and eventually will decrease. This law explains the short-run production function.
9. When the Price of a Good Falls by 10%, its Demand Rises from 200 Units to 220 Units. Calculate its Price Elasticity of Demand (PED)
PED formula using percentage method:
PED = % Change in Quantity Demanded / % Change in Price
% Change in Quantity Demanded = (220 - 200) / 200 × 100 = 10%
% Change in Price = -10% (negative because price falls)
PED = 10% / -10% = -1
The price elasticity of demand is -1 (unitary elastic).
10. Price Elasticity of Demand (PED) Based on the Following Schedule
Price per unit (Rs.) Total Expenditure (TE) Demand (Units)
10 180 18
9 162 18
The Total Expenditure (TE) is constant at 180 when the price is Rs. 10 and Rs. 9, which suggests that the demand is perfectly inelastic. There is no change in total expenditure despite the price change, so the PED is zero (i.e., perfectly inelastic demand).