Nios Class 10th Economics (214) Very Very Important Questions with Solutions. in English MediumTeam Manish Verma
Question – 1 Explain the ‘medium of exchange’ function of money.
Answer – The “medium of exchange” function of money refers to its role as a widely accepted and easily transferable intermediary in economic transactions. It simplifies trade by eliminating the need for barter and provides a common unit for buying and selling goods and services.
Question – 2 Describe how consumer goods are different from producer goods. Give examples.
Answer – Consumer goods and producer goods, also known as capital goods, serve distinct roles in an economy.
- Consumer Goods:
Consumer goods are tangible products designed for direct consumption and personal satisfaction by individuals or households. They fulfill the immediate needs and desires of consumers. Examples include everyday items like clothing, electronics (e.g., smartphones and laptops), food, furniture, and personal hygiene products. Consumer goods are the final output of the production process and are intended for end-users.
- Producer Goods (Capital Goods):
Producer goods, or capital goods, are assets used by businesses and industries to produce other goods and services. They are not meant for direct consumption but instead facilitate the production of consumer goods. Examples of producer goods include machinery, manufacturing equipment, raw materials, tools, industrial robots, and transportation vehicles. These items enhance the efficiency, productivity, and capacity of production processes, indirectly contributing to the creation of consumer goods.
Question – 3 State in any four ways the need for ‘Consumer Awareness’.
Answer – Consumer awareness is crucial for several reasons:
- Protection from Fraud: Consumer awareness helps individuals identify and avoid fraudulent or deceptive practices, such as scams, counterfeit products, and false advertising, safeguarding their financial interests.11.0
- Informed Decision-Making: Being aware of product features, quality, pricing, and alternatives enables consumers to make informed choices, ensuring they get value for their money and meet their needs effectively.
- Health and Safety: Awareness of potential health risks associated with certain products or services, such as food ingredients or product recalls, allows consumers to protect their well-being and safety.
- Promoting Responsible Business Practices: Informed consumers can influence businesses to adhere to ethical and sustainable practices by choosing products and services that align with their values, promoting positive change in the market.
Question –4 Explain briefly the ‘existence of poverty’ feature of the Indian economy.
Answer – The existence of poverty is a significant feature of the Indian economy. Despite notable economic growth, a substantial portion of the population still lives below the poverty line. Factors contributing to this issue include income inequality, lack of access to education and healthcare, and limited employment opportunities. Poverty remains a complex challenge, and the Indian government has implemented various social welfare programs to alleviate poverty and improve the living conditions of the economically disadvantaged.
Question -5 Why do we want our income to increase every year? Give any three reasons for it.
Answer – Increasing income annually is a common goal for several reasons:
- Improved Quality of Life: Higher income allows for a better standard of living, including access to better housing, healthcare, education, and overall comfort.
- Financial Security: A rising income provides a safety net for emergencies, retirement planning, and the ability to invest for the future.
- Achieving Goals and Aspirations: Increasing income enables individuals to pursue personal goals, such as buying a home, traveling, or supporting their children’s education, leading to greater personal fulfilment and satisfaction.
Question-6 State two roles played by the development banks in achieving economic development for the country.
Answer – Development banks play crucial roles in achieving economic development for a country:
- Providing Long-Term Capital: Development banks offer long-term loans and financial assistance to promote key sectors like infrastructure, agriculture, and industry. These long-term investments help stimulate economic growth and development by providing the necessary capital for large-scale projects and initiatives.
- Promoting Industrialization and Innovation: Development banks often support innovation and industrialization by offering funding and technical assistance to businesses and entrepreneurs. They help nurture and expand industries, encouraging job creation, technology adoption, and overall economic progress.
Question –7 Explain the importance of the primary sector.
Answer – The primary sector holds immense importance in any economy:
- Resource Provider: It supplies the raw materials necessary for various industries, supporting manufacturing and industrialization.
- Employment Generation: The primary sector employs a significant portion of the workforce, particularly in developing nations, contributing to income generation and poverty reduction.
- Food Security: It ensures a stable food supply, crucial for the well-being and health of the population.
- Export Earnings: Many countries rely on primary sector exports for revenue, bolstering trade balances and foreign exchange reserves.
- Sustainability: Sustainable practices in this sector are vital for preserving natural resources and ecological balance, ensuring their availability for future generations.
Question – 8 Describe how wants arise and grow.
Answer – Wants arise and grow through various factors:
- Basic Needs: Fundamental needs like food and shelter form the foundation of wants.
- Social and Cultural Influences: Cultural norms and societal expectations shape desires.
- Media and Advertising: Marketing and media create desires by showcasing benefits.
- Peer Pressure: Observing others can lead to a desire for similar possessions.
- Economic Factors: Income and financial conditions impact the desire for a higher standard of living.
- Technological Advances: New technology introduces new products, creating new wants.
- Life Stages: Wants evolve with different life stages and experiences.
- Globalization: Exposure to global trends and products expands desires.
Question – 9 How was the British Government responsible for the decline of handicraft industry in India?
Answer – The Britishers levied heavy duties on raw materials, imposing a financial burden on artisans who relied on affordable supplies.
The British government contributed to the decline of India’s handicraft industry through various policies. They flooded the Indian market with cheap British manufactured goods, undercutting local artisans. Heavy taxation and revenue policies squeezed the income of craftsmen.
Economic drain deprived the Indian economy of resources needed for the industry. Infrastructure development primarily served British interests, making it harder for handicrafts to reach markets. British monopolies stifled indigenous production, and the lack of support for artisans and traditional education further eroded the sector. These factors collectively led to the decline of India’s rich handicraft heritage during colonial rule.
Question – 10 Explain the difference between demand and desire.
Answer – Demand refers to the willingness and ability to purchase a product at a specific price, reflecting a consumer’s intention to buy. Desire, on the other hand, is a broader concept representing a mere wish or want for a product, without necessarily involving the ability or intention to make a purchase. Demand is a more concrete and actionable concept in economics, while desire is a subjective expression of interest.
Question – 11 Explain the primary functions of a bank.
Answer – The primary functions of a bank include accepting deposits, providing loans and credit, facilitating payments, offering currency exchange services, safekeeping of valuables, investment services, clearing and settlement of financial transactions, credit creation, financial intermediation, risk management, and assisting in the implementation of monetary policy.
Question – 12 How is the demand for a commodity by the price influenced of its related goods? Explain.
Answer – The demand for a commodity is influenced by the prices of its related goods through the concept of cross-price elasticity of demand.
- Substitute Goods: When the price of a substitute for a commodity rises, the demand for that commodity typically increases. Consumers switch to the relatively cheaper substitute. For example, if the price of brand A’s soda rises, consumers may opt for brand B’s soda, causing an uptick in demand for brand B.
- Complementary Goods: Complementary goods are usually consumed together. When the price of one complementary good increase, the demand for the other tends to decrease. For instance, if the price of smartphones rises, demand for mobile apps may decrease as owning and using a smartphone becomes costlier.
The relationship between related goods and the demand for a commodity depends on whether the goods are substitutes or complements. These dynamics have important implications for pricing, marketing, and consumer behaviour analysis.
Question – 13 What is insurance? Name any two of its products.
Answer – Insurance is a financial arrangement in which individuals or entities pay premiums to an insurance company in exchange for protection against financial losses or risks. It serves as a safeguard, transferring the responsibility for potential losses to the insurer. Two common insurance products are:
- Auto Insurance: This product provides coverage for damages, injuries, or theft related to automobiles, including cars, motorcycles, and trucks.
- Life Insurance: Life insurance offers financial protection to beneficiaries in the event of the policyholder’s death, providing a lump sum payout to help cover expenses or replace lost income.
Question – 14 What is black marketing? What is its solution?
Answer –Black marketing refers to illegal or underground activities where goods or services are traded outside the formal, regulated market, often involving tax evasion, counterfeiting, or illicit trade.
Solutions to combat black marketing include strengthening law enforcement, simplifying tax structures, regulating certain industries, raising public awareness, promoting international cooperation, financial inclusion, whistleblower programs, economic development, technological solutions, and trade agreements. Effective measures often require a combination of legal, economic, and social efforts to address the complex and pervasive nature of black marketing.
Question – 15 Differentiate between Wholesale and Retail markets.
Answer – Wholesale markets primarily serve businesses, offering products in large quantities at lower per-unit prices. Their customers include retailers, other wholesalers, and institutions. Wholesale markets often lack attractive packaging and focus on efficiency. In contrast, retail markets target individual consumers, providing products in consumer-friendly quantities with higher per-unit prices.
Retailers package and present goods attractively, and their locations are dispersed to accommodate consumer accessibility. Retail transactions generally involve fixed prices, while wholesale transactions may involve negotiation and contractual agreements.
Question – 16 A mixed economy combines the best features of capitalism and socialism. Explain.
Answer – A mixed economy blends the strengths of capitalism and socialism to create a balanced economic system. It embraces private ownership, entrepreneurship, and market competition from capitalism, fostering innovation and economic growth. Simultaneously, it incorporates elements of socialism through government intervention and regulation to ensure fair competition, consumer protection, and social welfare. Income redistribution mechanisms reduce extreme inequalities and provide a safety net for vulnerable individuals. This combination seeks to strike a harmonious balance between individual economic freedom and collective social welfare, promoting economic stability, equitable opportunities, and a more inclusive society while mitigating the shortcomings of pure capitalism.
Question – 17 How does the income of the buyer affect demand of a normal good?
Answer – The income of a buyer has a direct impact on the demand for a normal good. As the buyer’s income increases, their demand for the normal good also increases. This positive relationship is due to the fact that higher income gives consumers greater purchasing power, enabling them to afford and buy more of the normal good while maintaining their consumption of other goods. The demand curve for normal goods shifts to the right with rising incomes, reflecting this increased demand.
Question – 18 Explain any four features of monopoly market.
- Single Seller: A monopoly market has only one dominant firm that controls the entire industry, eliminating competition.
- Unique Product: Monopolists offer products or services with no close substitutes, giving them significant pricing power.
- High Barriers to Entry: Monopolies often have strong barriers like patents, economies of scale, or exclusive access to resources, preventing new entrants.
- Price Maker: Monopolists set prices independently, maximizing their profit by producing where marginal cost equals marginal revenue, leading to potentially higher prices for consumers.
Question – 19 Establish and explain the link between agriculture, industry and service sectors with the help of a suitable example from real life.
- Agriculture: Wheat is grown in the agricultural sector. Farmers cultivate and harvest wheat, a primary agricultural product.
- Industry: In the industrial sector, the harvested wheat is processed into flour at a mill. Flour production is an example of an industrial process.
- Service: Finally, in the service sector, bakeries and bread shops utilize the flour to make bread. These establishments provide services to consumers by baking and selling bread.
This interconnectedness demonstrates how raw materials from agriculture are transformed by industry into processed goods, and then the service sector adds value by offering finished products to consumers, highlighting the symbiotic relationship among0 these sectors in the economy.
Question -20 Calculate the arithmetic mean from the following data by the shortcut method:
Answer – To calculate the arithmetic mean (average) using the shortcut method, you can multiply each value of X (the number of students) by its respective frequency (the number of students in each category), sum the products, and then divide by the total number of students. Here’s the calculation:
X No. of Students X * Frequency
0 20 0 * 20 = 0
1 10 1 * 10 = 10
2 70 2 * 70 = 140
3 60 3 * 60 = 180
4 40 4 * 40 = 160
Now, sum the X * Frequency column:
0 + 10 + 140 + 180 + 160 = 490
Next, find the total number of students:
20 + 10 + 70 + 60 + 40 = 200
Now, calculate the arithmetic mean:
Arithmetic Mean =(Sum of X * Frequency) / (Total Number of Students)
Arithmetic Mean = 490 / 200
Arithmetic Mean = 2.45
So, the arithmetic mean of the given data is 2.45.
Question – 21 Explain the problem of ‘double coincidence of wants’ faced with the barter system of exchange.
Answer – The problem of “double coincidence of wants”is a key drawback of the barter system of exchange. In a barter system, goods and services are directly exchanged without using money. The challenge arises because for a trade to occur, both parties must have something the other desires. This means there must be a perfect match of preferences and needs between the two parties. Finding this exact match is often difficult, leading to inefficiencies, limited exchange opportunities, and complex negotiations. It restricts the scope of trade and can result in the inefficient allocation of resources. This problem is a significant reason why modern economies use money as a universally accepted medium of exchange to facilitate transactions.
Question –22 Distinguish between large scale industries and small-scale industries.
Distinguishing large-scale industries from small-scale industries:
- Large-scale industries:
- High capital investment.
- Extensive production capacity.
- Operate at a regional, national, or global level.
- Employ a significant workforce.
- Embrace advanced technologies and innovation.
Subject to complex regulations and incentives.
- Small-scale industries:
- Limited capital investment.
- Smaller production capacity.
- Employ a comparatively smaller workforce.
- May have higher production costs due to limited scale.
- Subject to distinct regulations to support local development and employment.
Question -23 Distinguish between large – scale industries and small-scale industries.
Answer –Differences between large-scale and small-scale industries:
- Size and Investment:
Large-scale industries involve substantial capital investment.
Small-scale industries have limited capital investment.
- Production Capacity:
Large-scale industries have extensive production capacities, often using advanced technology.
Small-scale industries have limited production capacity and may rely on manual labor.
- Market Reach:
Large-scale industries serve regional, national, or global markets.
Small-scale industries typically cater to local or niche markets.
Large-scale industries employ a large workforce.
Small-scale industries provide employment to a smaller number of people.
- Economies of Scale:
Large-scale industries benefit from economies of scale, reducing production costs.
Small-scale industries may have higher production costs per unit.
- Regulatory Environment:
Governments may apply different regulations and incentives to promote both large and small-scale industries.
Question – 24 Explain how change in the taste and preferences affects the demand for a commodity.
Answer – A change in taste and preferences can significantly impact the demand for a commodity. When consumers develop a greater liking for a product, its demand rises as they are willing to buy more. Conversely, if preferences shift away from a commodity, demand decreases as consumers buy less of it.
These changes are influenced by factors like cultural trends, advertising, health consciousness, and demographic shifts. Businesses need to adapt to these evolving preferences to stay competitive and meet consumer demands effectively in the marketplace.
Question – 25 Explain Difference between costumer and consumer.
Answer –The key difference between a customer and a consumer lies in their roles in a transaction. A customer is the entity or person who purchases a product or service from a business. They may or may not be the ultimate user of the product.
In contrast, a consumer is the end-user of the product or service, the one who actually uses or consumes it. While these terms often refer to the same person in everyday transactions, they can differ in scenarios where products are bought on behalf of others or in business-to-business relationships.
Questions – 26 Define supply. State the law of supply.
Answer – Supply refers to the quantity of a good or service that producers are willing to offer for sale in a market at various price levels. The Law of Supply states that, all else being equal, as the price of a product increases, the quantity supplied by producers also increases, and as the price decreases, the quantity supplied decreases. It illustrates the positive relationship between price and quantity supplied.
Question – 27 Differentiate between Bank and Banking.
Bank and banking are related concepts, but they have distinct meanings:
- A bank is a financial institution that provides a wide range of financial services, including accepting deposits, lending money, facilitating transactions, and offering various financial products.
- Banks serve as custodians of funds, and they offer services like savings and checking accounts, loans, mortgages, investment services, and more.
- Banks are physical institutions with branches and often have a presence in both the online and offline financial sectors.
- Banking refers to the overall industry and activities associated with banks and financial institutions.
- It encompasses the entire system of managing and conducting financial transactions, including depositing, borrowing, investing, and providing financial services.
- Banking also includes the regulations, policies, and practices that govern the industry as a whole.
Question – 28 Explain any two advantages of advertising, you get as an consumer.
Answer – As a consumer, you can benefit from advertising in several ways. Here are two advantages:
- Informed Choices: Advertising provides you with information about various products and services available in the market. It allows you to learn about the features, benefits, and pricing of different options. This information empowers you to make informed decisions and choose products or services that align with your needs and preferences. Without advertising, you might have limited awareness of the available choices and their attributes.
- Price and Promotion Awareness: Advertising often highlights discounts, promotions, and special offers. As a result, you can take advantage of sales, discounts, and deals to save money on your purchases. Advertising informs you about ongoing sales events, seasonal promotions, and loyalty programs, allowing you to make cost-effective choices and maximize the value of your purchases.
Question – 29 Describe the ‘private property’ feature of a capitalist economy.
Answer –Private property in a capitalist economy is a foundational principle where individuals and entities have the exclusive right to own, control, and use assets, resources, and property. This concept incentivizes investment, economic efficiency, and individual freedom.
It enables market transactions, wealth accumulation, and entrepreneurship. However, it also raises issues of wealth inequality, necessitating government regulation and oversight to maintain fairness and social stability within the capitalist framework.
Question – 30 State any two advantages of international trade.
Answer – Two advantages of international trade are:
- Economic Efficiency: International trade allows countries to specialize in the production of goods and services where they have a comparative advantage, meaning they can produce these products more efficiently and at lower costs than other countries. This specialization leads to increased productivity, lower prices for consumers, and a more efficient allocation of resources.
- Diversification and Risk Reduction: International trade enables countries to diversify their sources of revenue and reduce economic risks. By participating inglobal trade, nations are less dependent on the success or failure of their domestic industries. This diversification can provide stability and resilience to a country’s economy.
Question – 31 Explain the importance of firms and industries.
Answer – Firms and industries are pivotal for economic vitality. They create jobs, drive innovation, and foster economic growth. By allocating resources efficiently, they ensure optimal utilization of labor, capital, and materials. Industries contribute significantly to GDP and international trade, enhancing a nation’s economic standing.
Moreover, firms provide a diverse array of products and services, promoting consumer choice and competition. They also generate tax revenue, enabling governments to fund public services. In essence, firms and industries are the engines of economic development, influencing living standards, employment, and the overall well-being of societies.
Question – 32 If income is 1000 and saving is 200 then what is the amount of consumption?
Answer – To find the amount of consumption, you can use the following formula:
Consumption = Income – Savings
In your case:
Income = $1,000
Savings = $200
So, using the formula:
Consumption = $1,000 – $200 = $800
The amount of consumption is $800.
Question – 33 State any two characteristics of wants.
Answer – Two characteristics of wants are:
- Insatiable: Wants are often insatiable, meaning that they are unlimited and can never be completely satisfied. As one want is fulfilled, another emerges, leading to an ongoing cycle of desire for more goods and services.
- Subjective: Wants are subjective in nature, varying from person to person. What one individual desire may not be the same as what another person desires. The specific wants and priorities of individuals can be influenced by factors such as culture, personal preferences, and life experiences.
Question – 34 Name two major trading partners of India?
- United States: The United States is one of India’s largest trading partners, and the two countries engage in a significant volume of trade in various sectors, including information technology, pharmaceuticals, machinery, and agricultural products.
- China: Despite occasional political tensions, China is another major trading partner for India. The trade relationship between India and China involves a variety of goods, such as electronics, machinery, chemicals, and textiles.
Question – 35 Write three sentences about the Zamindars?
- Zamindars were traditional landowners in India during the colonial era, holding significant landownership and administrative rights over vast tracts of land in various regions.
- They collected land revenue from local farmers and tenants, acting as intermediaries between the British colonial authorities and the rural population, often leading to exploitative practices and agrarian disputes.
- The Zamindari system was gradually phased out after India gained independence in 1947 as part of land reform measures, which aimed to distribute land more equitably among the rural population and reduce the power and influence of these landowning intermediaries.
Question – 36 Developed Economy and Developing Economy.
Answer – A developed economy is characterized by a high standard of living, advanced industrialization, a diversified economy, high GDP per capita, extensive infrastructure, low poverty, reduced income inequality, and accessible education and healthcare.
In contrast, a developing economy typically has a lower standard of living, limited economic diversification, lower GDP per capita, underdeveloped infrastructure, higher poverty and income inequality, and challenges in providing quality education and healthcare. These classifications are not fixed and can change over time as countries progress and develop.
Question – 37 What Is a Mixed Economic System?
Answer – A mixed economic system is a system that combines aspects of both capitalism and socialism. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims.
Question –38 What are primary data? Describe any one methods of collecting primary data.
Answer – Primary data refers to data that is collected firsthand directly from the source. It is original information obtained by researchers or individuals for a specific purpose. Here are two methods of collecting primary data:
Surveys involve structured questionnaires or interviews to collect information from individuals or groups. Researchers design questions to gather data about a particular topic. Surveys can be conducted in various ways, including face-to-face interviews, phone surveys, online questionnaires, or mailed surveys. They are useful for collecting data on people’s opinions, preferences, and behaviours.
Question –39 What is meant by ‘soil degradation’? Explain the effects of soil degradation.
Answer – Soil degradation is the deterioration of soil quality and productivity due to various factors, including human activities. Its effects include:
Reduced Agricultural Productivity: Lower soil fertility leads to decreased crop yields and food production.
- Erosion: Loss of topsoil through wind or water erosion, depleting nutrients and organic matter.
- Desertification: Transformation of arable land into desert due to prolonged degradation.
- Water Pollution: Contaminated soil can lead to polluted groundwater and surface water.
- Flooding: Impaired soil’s water-holding capacity can result in increased runoff and flooding.
- Loss of Biodiversity: Ecosystems reliant on healthy soil suffer, causing a decline in biodiversity.
- Economic Impact: Increased costs for soil restoration affect agriculture and consumers.
Question – 40 What is the role of the government in controlling prices in India? Explain.
Answer – The government in India controls prices through various means:
- Price Controls: Imposing price ceilings and floors on essential commodities.
- Public Distribution System (PDS): Subsidizing and distributing basic goods to low-income consumers.
- Import and Export Regulations: Managing international trade to influence domestic prices.
- Buffer Stock Management: Maintaining stockpiles of essential goods to manage supply and prices.
- Monetary and Fiscal Policy: Using interest rates and taxes to impact inflation.
- Anti-Hoarding Measures: Preventing hoarding and speculative activities.
- Consumer Protection Laws: Enforcing regulations to prevent price gouging and unfair trade practices.
- Regulation of Service Sectors: Controlling prices in sectors like healthcare, education, and utilities.
Question – 41 What are factor incomes?
Answer – Factor incomes, also known as factor payments or income factors, are the payments made to the factors of production in an economy as compensation for their contribution to the production of goods and services.
These factors of production are typically grouped into four categories:
- Labor: This includes wages and salaries paid to individuals for their work in the production process. Labor is one of the most significant factors of production, and wages are the primary form of factor income for labor.
- Capital: Capital refers to the financial and physical assets used in the production process, such as machinery, buildings, and equipment. The factor income for capital is typically in the form of interest, rent, or profit. Interest represents the return on financial capital, rent is the income generated by physical capital, and profit is the return to the business owners for their investment in the enterprise.
- Land: Land includes natural resources like land itself, minerals, water, and other raw materials. The factor income for land is rent, which is the payment made to the owners of land and natural resources for their use in production.
- Entrepreneurship: Entrepreneurship refers to the innovation, risk-taking, and organizational skills of individuals who organize and manage the other factors of production. The factor income for entrepreneurship is typically in the form of profit, which represents the reward for the entrepreneurial function, including taking on risk and making management decisions.
Question – 42 The following are the marks secured by 70 students of 11th class in Economics. Calculate arithmetic mean by using short cut method.
For the class “0 – 20,” the midpoint is (0 + 20) / 2 = 10.
For the class “20 – 40,” the midpoint is (20 + 40) / 2 = 30.
For the class “40 – 60,” the midpoint is (40 + 60) / 2 = 50.
For the class “60 – 80,” the midpoint is (60 + 80) / 2 = 70.
For the class “80 – 100,” the midpoint is (80 + 100) / 2 = 90.
Multiply the midpoints by their corresponding frequencies:
(10 * 8) = 80
(30 * 11) = 330
(50 * 20) = 1000
(70 * 21) = 1470
(90 * 10) = 900
Sum the products:
Sum = 80 + 330 + 1000 + 1470 + 900 = 3780
Divide the sum by the total number of students (70 in this case):
Arithmetic Mean = Sum / Total number of students
Arithmetic Mean = 3780 / 70 = 54
So, the arithmetic mean (average) of the marks is 54.
Question – 43 Why does the demand curve slope downwards from left to right? Explain
- Substitution Effect: As prices drop, consumers are more inclined to switch from costlier alternatives to the now cheaper product, increasing the quantity demanded.
- Income Effect: Price changes affect consumers’ real income. Lower prices mean consumers can afford more goods, increasing demand, and vice versa.
- Law of Diminishing Marginal Utility: As more of a good is consumed, the additional satisfaction from each additional unit decreases. Hence, lower prices make consumers willing to buy more due to higher marginal utility.
Question – 44 Explain the relationship between price of the commodity and its quantity supplied.
- When the price of a commodity goes up, suppliers usually want to sell more of it because they can make more money.
- Higher prices make it more profitable to produce and sell that commodity.
- Suppliers may also put more resources into making it.
- When the price drops, suppliers might produce and sell less of the commodity because it’s less profitable.
In a graph, you see this as an upward-sloping supply curve, showing how quantity supplied goes up as the price goes up, assuming other things don’t change.
Question –45 Explain why it was difficult to equate the values of different goods which were traded, under barter system of exchange.
Answer – Equating the values of goods in a barter system was challenging for several reasons:
- Double Coincidence of Wants: Both parties needed to have something the other desired, requiring a rare coincidence of wants.
- Indivisibility: Some goods were not easily divisible for trade, like a whole cow or a house.
- Lack of Standardization: Goods were not uniform, varying in quality, quantity, or condition.
- Subjective Valuation: Individuals placed different values on the same goods based on personal preferences, needs, and circumstances.
- No Common Measure of Value: Without a universal unit of account like money, there was no standardized way to compare the worth of different goods.
These challenges made barter less efficient and led to the development of money as a medium of exchange.
Question – 46 Problem of ‘allocation of resources’ arises because:
(A) Human wants are unlimited
(B) Resources are scarce
(C) Resources can be put to alternative uses
(D) All of the above
Answer – D) All of the above
Question – 47 Which of the following is the relation that the law of demand defines?
- a) Income and price of a commodity
- b) Price and quantity of a commodity
- c) Income and quantity demanded
- d) Quantity demanded and quantity supplied
Answer – B) Price and quantity of a commodity
Question – 48 What do you mean by the supply of goods?
- a) Stock available for sale
- b) Total stock in the warehouse
- c) The actual production of the goods
- d) Quantity of the goods offered for sale at a particular price per unit of time
Answer –D) Quantity of the goods offered for sale at a particular price per unit of time.
Question – 49 What do you mean by the demand of a commodity?
- a) Desire for the commodity
- b) Need for the commodity
- c) Quantity demanded of that commodity
- d) Quantity that consumers are able and willing to buy at various prices during any particular period of time
Answer –D)Quantity that consumers are able and willing to buy at various prices during any particular period of time
Question – 50 The goal of a pure market economy is to meet the desire of ______ .
- a) Consumers
- b) Companies.
- c) Workers
- d) The government
Answer -A) Consumers
Question – 51 What does the law of demand mean?
- a) As the quantity demanded rises, the price rises.
- b) As the price rises, the quantity demanded rises.
- c) As the price rises, the quantity demanded falls.
- d) As the supply rises, the demand rises.
Answer -C) As the price rises, the quantity demanded falls.
Question – 52 Identify which of the following is not an example of tax revenue for the government.
- Wealth Tax
- Special Assessments
- Income Tax
- Corporate Tax
Answer -B) Special Assessments