ECONOMICS (Oct’ 2017)
(318)
NIOS SENIOR SECONDARY Solved Papers
Time: 3 Hours
Maximum Marks: 100
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Basis
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Median
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Mode
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1.
Meaning
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Median is the value of the variable
which divides the series into two equal parts.
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Mode is the most common value. It
occurs most frequently in the series.
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2.
Calculation
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It is easy calculate and simple to
understand.
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It is difficult to calculate. It
cannot be determined in case of
multimodal distributions.
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3.
Impact of Extreme values
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It is not affected by extreme values
(i.e. very large and very small values).
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It is also not affected by extreme
values, because it depends only on the largest frequency.
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19. What is autonomous investment? Represent the same on a diagram. 3
Ans.:- The Autonomous Investment is the capital investment which is independent of the economy shifts. This means, any change in the cost of raw material or any change in the salary and wages of labour etc. has no effect on the autonomous investment.
The autonomous investment is made for the welfare of the society and not for generating profits out of such investments. These investments are independent of the level of income or profit, and hence, any change in the income or profit level will have no effect on the autonomous investment. This can be shown in the figure below:
The graph show that autonomous investment remains independent of the level of income and profit and hence is parallel to the X axis. It does not mean that induced investment does not change at all; it can be increased or decreased at the individual’s disposal. In such a case, the investment curve 1-1 either shifts upwards or downwards.
20. Calculate revenue deficit from the following:
(i) Tax revenue 200
(ii) Non-tax revenue 300
(iii) Recovery of loan 100
(iv) Revenue expenditure 600 3
21. Explain the difference between ‘absence of correlation’ and ‘perfect correlation’. 3
Ans.:- If both the variables are moving in the same direction, correlation is said to be positive or direct. For example, increase in the values of one variable causes an increase in values of the other variable or decrease in one variable makes a decrease in the other variable. When the income rises, consumption also rises and when income falls consumption also falls. Thus, income and consumption have positive correlation. On the other hand, if both the variables vary in opposite direction, i.e., with an increase in the values of one variable, there is a decrease in the values of the other, correlation is said to be negative or absence of correlation. For example, when price of a commodity falls, its demand increases, when price rises, its demand decreases. Thus, price and demand have negative correlation.
22. When price of a good falls by 20 percent, its supply falls by 40 percent. Calculate price elasticity of supply. 4
Solution:-
Price elasticity of supply = percentage change in quantity
percentage change in price
Pes = 40
20 = 2
23. State the relation between marginal physical product and average physical product. 4
Ans.:- Both the average physical product (APP) and the marginal physical product (MPP) are ultimately based on the total product. All three curves are shown in the graphs below.
The MPP curve is the measure of the change in output per unit of input. Mathematically, it is obtained b plotting the derivative of each point on the total product curve (slope of the tangent line to the curve at each point). This is why the MPP hits the horizontal axis at the peak of the total production curve (because the tangent line at the peak has a slope of 0).
So the relationship between the two is that the MPP measures the rate of change of output while the APP measures the actual output levels. So the MPP acts as a driver for the APP since the rate of change will directly affect the average output. This is why the MPP curve drops off so much more quickly than the APP. In order for the average output to drop, the rate of (negative) change in the output must change even more so to have that effect.
24. Calculate the personal income from the following :
(i) Saving of private corporate sector 20
(ii) Net domestic product at factor cost accruing to the private sector 700
(iii) Corporation tax 60
(iv) National debt interest 100
(v) Net current transfers from abroad 10
(vi) Net factor income from abroad (-)10
(vii) Current transfer form government 30
25. With the help of example how the ‘lack of common unit of measurement’ was a demerit of the barter system. 4
Ans.:- “Lack of common unit of measurement”- In barter, there is no common measure (unit) of value. Even if buyer and seller of each other commodity happen to meet, the problem arises in what proportion the two goods are to be exchanged. Each article must have as many different values as there are other articles for which it is to be exchanged.
When thousands of articles are produced and exchanged, there will be unlimited number of exchange ratios. Absence of a common denominator in order to express exchange ratios creates many difficulties. Money obviates these difficulties and cats as a convenient unit of value and account. For example you need sugar in exchange of wheat it is so difficult to measure that what quantity of sugar you get in what quantity of wheat and so on.
26. Explain ‘open market operations’ as an instrument of credit control. 4
Ans.:- Open market operations:- Prof. Halm remarks, “In view of the short-comings rediscount policy the development of open market operations – the purchase and sale of government securities and other credit instruments in the open market – as an additional and to some extent alternative instrument of central bank policy is a logical step.” In other words, whenever the central bank wants to regulate the amount of money in circulation, it resorts to open market operations, the sale and purchase of securities by the central bank.
If the central bank wishes to reduce the volume of credit, it sells securities to the public, for which it receives payment either in cash from the public (in which case the quantity of money with the public to that extent is reduced) or it may receive payments by cheques drawn on the commercial banks, in which case the cash held by these banks with the central bank is reduced, and to that extent, commercial banks are compelled to reduce the volume credit.
27. Calculate Quartile Deviation of marks obtained by seven students:
30,100,70,40,60,50,80 4
Solution:-
Q1=Size of N+14th term
=;; ;; 7+14;; ;;
= ;; ;;2 ;; ;;
Q3=Size of 3N+14th term
= ;; ;; 3(7+1)4 ;; ;;
=;; ;; 244 ;; ;;
= ;; ;;6 ;; ;;
QD=Q3-Q12
=6-22
=42
= 2
28. Calculate Price index of the year 2013. Taking year 2012 as base year use “ Simple Average of price Relatives.” Method. Comment upon the result. 6
29.Explain how the following affect the price elasticity of demand of a good?
(i) Share of expenditure on goods in total expenditure.
(ii) Level of income. 6
30. A consumer consumes only two goods X and Y. State the conditions of consumer’s equilibrium using utility analysis. Explain what happens when consumer is not in equilibrium. 6
31. Explain the distinction between private costs and social cost. Give examples . 6
Ans.:- The following are the difference between Private costs and social costs:-
The difference between these two is that private costs are only one part of overall social costs. Social costs take into account not only private costs, but also the externalities that come as a result of a given economic decision.
Private costs are the costs with which we are all familiar. These are the costs that we actually have to pay when we decide to do something. Let us take the example of owning and driving a car. Clearly, there are many private costs involved here. If I own and drive a car, I have to buy the car. Then I have to pay for the gas I use. I have to maintain the car. I have to buy insurance. I have to spend time in the car being unable to do much else other than driving. These are all private costs because I actually have to pay them and they are specific to me.
Social costs also include the externalities of driving my car. When I drive my car, it contributes to some extent to polluting the atmosphere. I do not directly pay for this, but it affects society. When I drive my car, I contribute to traffic congestion. Again, I do not pay for this, but i have at least a marginal effect on many other people who are also stuck in congestion, wasting their time.
Social costs is a category that includes both the more tangible private costs and the external costs of any given economic activity.
32. Calculate Net National Product at Factor cost from the following :
(Rs. In crore)
Private final consumption expenditure 900
Profit 60
Net factor income from abroad (-)10
Government final consumption expenditure 200
Consumption of fixed capital 20
Gross domestic capital formation 100
Subsidies 5
Exports 25
Indirect tax 70
Imports 30
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