Economics (214) - April' 2015 | NIOS SECONDARY Solved Papers

Ans.:- Production units are owned by two or more persons. Maximum number is 20. Owners of such production units are called partners of the company.

11. Distinguish between private goods and public goods.            2

Ans.:- All goods that are privately owned and are exclusively enjoyed by individuals are called private goods. Whereas Public goods are those goods, which are owned and enjoyed by the society as a whole.

12. State two aspects included in the term ‘Increase in production’.       2

Ans.:- In production there are two features which explain increasing economic well-being. They are improving quality-price-ratio of goods and services and increasing incomes form growing and more efficient market production.

13. What do you mean by distribution of goods and services?   2

Ans.:- Distribution is a step in the economic process which brings goods and services from those who make them to those who use them.

14. How will the equilibrium price of a commodity be affected when market demand for the commodity is less than its supply?                2

Ans.:- If demand for the commodity decreases but its supply remains the same, it will lead to decrease in equilibrium price and quantity demanded and supplied of the commodity.

15. Suppose, you are a manager in a bank. Explain to a customer about ‘recurring deposit account’.       2

ans.:- Recurring deposit schemes allow you an opportunity to build up your savings through regular monthly deposits of a fixed sum over a fixed period of time. The minimum period of a recurring deposit is six months and the maximum is ten years. The rate of interest offered to you is similar to that of fixed deposits.

16. Define Saving.           2

Ans.:- Saving is the amount of income which is carried forward to future after meeting the current expenditure on goods and services and other things. This means that saving is the surplus of income over consumption. We can write that

                Saving = Income – Consumption

17. Who are included in unemployed population?          2

Ans.:- Unemployment is defined by the Brueau of Labour Statistics as people who do not have a job, have actively looked for work in the past four weeks, and are currently available for work. Also, people who were temporarily laid off and were waiting to be called back to that job are include in the unemployment statistics.

18. What are ‘Intellectual Property Rights’ (IPRs)?           2

Ans.:- Intellectual property rights include patents, copyright, industrial design rights, trademarks, plant variety rights, trade dress, geographical indications, and in some jurisdictions trade secrets.

19. “Wants change and expand with development’. Justify this statement.        4

Ans.:- In ancient times, man was satisfied with simple items of food, clothing and shelter etc. But with the development these wants grew in nature and number. Our want for food we eat has changed. We want to eat not only better and nutritious food but different varieties of food. Similarly we want to wear not only a pair of clothes but we want variety as well as latest designs according to the fashion, we want to have a better house with modern facilities like, air conditioners, geysers etc. we all know that for communication we not only want a simple telephone but also a mobile phones having many facilities like camera, internet, video recording etc. Thus, man’s evergrowing and changing wants lead to many inventions and descoveries which result in new and better quality of goods and services.

20. Suppose, you are an entrepreneur. Explain any tow factors which will affect your decision in choosing whether you have to use labour intensive method or capital intensive method of production for production of a good.          4

Ans.:- When I have to make more use of labour and less use of capital per unit of output in the production of my commodity I will use labour intensive technology.

When I have to make more use of capital and less use of labour per unit output in the production of my commodity I will use capital intensive technology of production.

21. Distinguish between large scale industries and small scale industries.                           4

Ans.:- Differences between large scale industries and small scale industries

Large Scale Industries	Small Scale Industries
These industries require huge investment.	These industries do not require huge investment.
A huge quantity of raw material is needed.	No huge quality of raw material is needed in these industries.
They manufacture goods in large quantities.	They manufacture goods in small quality.
Women workers are not usually employed in these industries.	We see a large number of woman employees in these industries.

22. Explain any two advantages of advertising. You get as a consumer.  4

Ans.:- We get the following advantages of advertising as a consumer:

1. Educates the Consumers:- Advertising is educational and dynamic in nature. It familiarises the customers with the new products and their diverse uses and also educates them about the new uses of existing products.

2. Elimination of Middlemen:- It aims at establishing a direct link between the manufacturer and the consumer, thereby eliminating the marketing intermediaries. This increases the profits of the manufacturer and the consumer gets the products at lower prices.

23. Explain in any two ways how is insurance important for business.    4

Ans.:-  Following are the two ways of importance of insurance for business:-

1. The uncertainty of Business Losses is Reduced:- In the world of business, commerce, and industry a huge number of properties are employed. With a slight slackness or negligence, the property may be turned into ashes. The accident may be fatal not only to the individual or property but to the third party also.

New construction and new establishment are possible only with the help of insurance, in absence of it, uncertainty will be to the maximum level and nobody would like to invest a huge amount in the business or industry.

2. Business Efficiency is Increased with Insurance:- When the owner of a business is free from the botheration of losses, he will certainly devote much time to the business. The carefree owner can work better for the maximization to the profit. The new, as well as old businessmen, are guaranteed payment of a certain amount with the insurance policies at the death of the person, at the damage, destruction or disappearance of the property or goods.

24. State any four main characteristics of a capitalist economy. 4

Ans.:- The following are the main features/characteristics of a capitalist economy:-

1. Private property:- In a capitalism system all the individuals have the right to own property. An individual can acquire property and use it for the benefit of his own family. There is no restriction on the ownership of land, machines, mines, factories and to earn profit and accumulate wealth.

2. Freedom of enterprise:- In a capitalist economy the government does not coordinate production decisions of the citizens. Individuals are free to choose any occupation. Freedom of enterprise implies that business firms are free to acquire resources and use them in the production of any good or service. The firms are also free to sell their product in the markets of their choice.

3. Consumer’s Sovereignty:- In a capitalist economy consumers are like a king. They have the full freedom to spend their income on goods and services that give them maximum satisfaction. In capitalist system production is guided by consumer’s choices. This freedom of consumers is called consumer’s sovereignty.

4. Profit Motive:- Self-interest is the guiding principle in capitalism. Entrepreneurs know that they will own the profit or loss after the payment to all other factors of production. Therefore they are always motivated to maximize their residual profit by minimizing cost and maximizing revenue.

25. What is an economic problem? Why does an economic problem arise?         4

Ans.- All societies face the economic problem, which is the problem of how to make the best use of limited, or scarce, resources. The economic problem exists because, although the needs and wants of people are endless, the resources available to satisfy needs and wants are limited.

Similarly, the economy also has to decide what goods and services are to be produced and how resources are to be used. Thus the issue of ‘choice’ arises because (a) the resources are scarce (b) the resources can be put to many alternative uses.

26. State in any four ways the importance of public sector in economic development of India.  4

Ans.:- Four ways the importance of public sector in economic development of India are:

(i) Public Sector and Capital Formation:- The role of public sector in collecting saving and investing them during the planning ear has been very important. During the first and second five year plan it was 54% of the total investment, which declined to 24.6% in the year 2010-11.

(ii) Employment Generation:- Public sector has created millions of jobs to tackle the unemployment problem in the country. The number of persons employed in the as on march 2011 was 150 lakh.

(iii) Balanced Regional Development:- Public sector undertakings have located their plants in backward parts of the country. These areas lacked basic industrial and civic facilities like electricity, water supply, township and manpower.

(iv) Contribution to Public Exchequer:- A part from generation of internal resources and payment of dividend, public enterprises have been making substantial contribution to the government exchequer through payment of corporate taxes, excise duty, custom duty etc.

27. ‘India is a developing country’. Justify this statement in any four ways.         4

Ans.:- After 62 years of Indian independence the economy has achieved several qualities for which she can be considered as a developing Nation.

Following are some important reasons behind this terminology:

(i) Increase in Net National Product:- According to the CSO, India’s net national product at factor cost i.e., national income was Rs. 1,32,367 crores in 1950.51 increased to Rs 12,66,005 crores in 2003-04.

(ii) Increase in Per Capita Income:- Increase in per capita net national product at factor cost is considered to be far better index of economic growth. According to 19993-94 prices, Indian’s per capita income in 1950-51 was Rs, 3,687.1. 2003-04, per capita income rose to Rs, 11,798.7.

(iii) Rise in Capital Formation:- According to Simon Kuznets, “Capital formation is necessary condition for economic productivity and growth.” Ruse in capital formation leads to increase in the growth of primary, secondary and tertiary sectors. During the planning period the gross domestic capital formation had increased from 8.7%  in 1950-51 to 26.3% in 2003-04.

(iv) Industrial Growth:- In India there are no such uniformity during the plan periods as far as industrial growth is concerned. According to Economic Survey, the average annual industrial growth rate in India which was 5.6% in First Five YEAR Plan had increased to 8.6% during The Tenth Five Year Plan.

28. How do economic factors affect development of a country?               4

Ans.:- The important economic factors are as follows:-

(i) Natural Resources:-  The availability of natural resources facilitate and accelerate economic growth and economic development. it is believed that quality and quantity of natural resources affect the rate of growth.

(ii) Human Resources:- Another important determinant of economic development is the quantity and quality of human resources or the population. Other things being equal, educated and technically qualified manpower helps in achieving higher growth rate. On the other hand illiterate and unskilled population retards economic growth.

(iii) Capital Formation:- Stock of capital goods in crucial for rapid economic growth. For increasing the stock of capital, rate of savings must be high. The savings must be invested. Given the rate of savings and investment the rate of growth will depend upon capital output ratio. If the domestic savings are not sufficient government can seek external assistance to increase capital formation and growth rate in developing countries.

(iv) Technology:- Technology can play an important role in the economic development. Technological progress depends upon continuous research and development. through technological progress a nation may overcome other constraints such as scarcity of natural resources and low productivity. Developed economies invest in its human capital.

29. What is meant by air pollution? State any three sources of air pollution.      4                 

Ans.:- Air pollution is the introduction of chemicals, particulate matter, or biological materials that cause harm or discomfort to humans or other living organisms, or cause damage to the natural environment or built environment, into the atmosphere.

Sources of air pollution are:

1. Smoke from power plants, factories, incinerators, furnaces, etc.

2. Exhaust of vehicles and automobiles like cars, buses, bikes, airplanes, ships, etc.

3. Chemicals like pesticides and fertilizers and dust from farming and other agricultural practices.

30. Distinguish between exhaustible and inexhaustible natural resources.         4

Ans.:- Exhaustible Vs Inexhaustible

(i) Inexhaustible natural resources are the resources which can used for long time as they are the most abundant resources in nature. Exhaustible natural resources can’t be used up as inexhaustible because they are very less available than inexhaustible natural resources.

(ii) Due to rapid industrialisation, the inexhaustible natural resources are depleting which is not good. Exhaustible natural resources which have already come to end are rapidly getting decreased due to human activities.

31. Explain any three reasons of differences in income from work.         6

Ans.:- The following are the three reasons of differences in income from work:-

(i) Difference in efficiency:- All persons are not equally efficient. They differ in abilities, efficiency, skill and attitude. Some people are more efficient and some are not efficient at all. An efficient worker gives better output than others. Different types of work require different abilities.

(ii) Immobility of labour:- Labour is generally immobile. The presence of non-competing groups in society makes the labour more immobile. Sometimes people are not prepared to accept higher wages if it involves a change of place. Transport difficulties also play a vital role in the immobility of labour. Political barriers against the free movement of labour from one country to another result in the difference in wages in different countries.

(iii) Presence of non competing group:- there are different groups of labour which are not competitive. These are called non-competing groups of labour. In our country this is generally due to caste system .The work of one caste cannot be done by others.

32. Explain the three important factors that influence the decision of a seller in fixing the price of his product.                6

Ans:- Important factors that influence the decision of a seller in fixing the price:-

a) Product cost:- The most important factor affecting the price of a product is its cost. Product cost refers to the total of fixed costs, variable costs and semi variable costs incurred during the production, distribution and selling of the product. Fixed osts are those costs which remain fixed at all the levels of production or sales.

b) The utility and demand:- usually, consumers demand more units of a product when its price is low and vice versa. However, when the demand for a product is elastic, little variation in the price may result in large changes in quantity demanded. In case of inelastic demand, a change in the prices does not affect the demand significantly. Thus, a firm can charge higher profits in case of inelastic demand.

c) Extent of competition in the market:- the next important factor affecting the price for a product is the nature and degree of competition in the market. A firm can fix any price for its product if the degree of competition is low.

33. How do ‘education’ and ‘nature of occupation’ influence the birth rate.         6

34. Explain any three ways in which consumers are exploited.  6

Ans.:- Three ways in which consumers are exploited

1. Most of the consumers are ignorant. They are not aware of the prices in the market or their rights and duties. Hence the traders easily exploit them.

2. Sometimes a particular good is supplied by only a particular company. Since their no other options available, the consumers are forced to buy what is available at whatever price and quality.

3. Sometimes the information provided on a product is wrong. Many a times consumers are provided with insufficient information and are exploited. 

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