Economics Model Question Solution  by CDC
CLASS : 10
The candidates are required to give their answers in their own words as far as practicable. The figures in the margin indicates full marks.Time: 3hr
Full Marks: 75
By: The subject notes channel
Answer: Â The addition of expenditure incurred on fixed factors used in short-run production process referred as total fixed cost.
2. If the total revenue is Rs.18 and Rs.24, respectively when selling the 3rd and 4th unit of a commodity, find the marginal revenue from the sale of the 4th unit.
Answer:Â Solution,
Marginal Revenue (MR) = Change in Total Revenue / Change in Quantity Sold
Then,
Change in Total revenue (TR) = 24-18 = Rs. 6
Change in Quantity sold = 4-3 = 1
Now,
MR= Change in TR / Change in Quantity sold = 6/1 = Rs. 6Â ans.
3. Mention any two characteristics of a Monopoly market.
Answer:Â Any two characteristics of a monopoly market are:
➢A single seller and large number of buyers.
➢No close substitute.
4.What is the effect on real wages when price level increases?
Answer:Â When the price level increases, real wages decrease as the purchasing power of income diminishes.
5.Write any two difficulties of barter system.
Answer:Â Any two difficulties of barter system are:
➢Lack of common measure value.Â
➢Lack of standard of deferred payment.
6.What type of money is called inconvertible paper money?
Answer:Â The money cannot be converted into gold and sliver as per the need is called inconvertible paper money.
7.Write any two examples of direct tax.
Answer:Â Any two examples of direct tax are:
➢Property tax.
➢Income tax.
8.With which theory of economic development the materialist interpretation of history is associated?
Answer:Â The theory of economic development the materialist interpretation of history is associated with the German economist and philosopher Karl Marx.
9.Who propounded the comparative cost theory of international trade?
Answer:Â The comparative cost theory of international trade was propounded by the classical economist, David Ricardo in 1817.
10.What is the situation which a country's exports visible goods exceed its imports with the rest of the world in the certain period?
Answer:Â When a country exports more visible goods than it imports from the rest of the world in a certain period, it known as a trade surplus.
11.Mention two methods of collecting data.
Answer:Any two methods of collecting data are:
➢Primary data collection method.
➢Secondary data collection method.
12. Fill the appropriate value in the blank spaces of the given table then construct AR and MR curves in a single diagram.)
13. Consider the table and answer the following questions:
b)Â Answer:In Figure, X-axis represents the quantity demanded and supplied of a product whereas Y-axis represents the price. These two curves are intersecting each other at the point E. The point E is the equilibrium point. Hence, the equilibrium price is Rs. 3 and the equilibrium quantity is 6 units.
C)Â Answer:Â In the figure, when market price is below than Rs. 3, demand is greater than supply, i.e. D > S. When market price is above Rs. 3, Supply is greater than demand, i.e. S > D. At market price Rs. 3 demand is equal to supply. That is why, Rs. 3 is the equilibrium price and the equilibrium quantity is 6 units determine by the market or industry.
14. Explain the Subsistence Theory of Wages highlighting its main ideas.
Answer:Â The subsistence theory of wages was developed by David Ricardo and other classical economists. This theory is based on population theory of Thomas Robert Malthus. It is also known and Iron law of wages and Iron .
According to this theory. Wages are determined by the cost of re determi production of labour or subsistence level.
This theory is based on following assumption:
➢Population increases at faster rate.
➢There is no existence of trade union.
➢The cost of production of labour is equal to subsistence wage.
➢It is based on long run concept.
Similarly, if the wages rate declines below the subsistence level population automatically decreases by malnutrition starvation, diseases etc people will have less interest marriage and birth. This will reduce labour supply. It helps to increase the wage rate at the minimum subsistence level.
OR,
14. Explain the role of uncertainty in the profit generation based on the Uncertainty- Bearing Theory of Profit.
Answer:Â The Uncertainty-bearing Theory of Profit was propounded by the American economist, Prof. Knight in his book entitled Risk Uncertainty and Profit, published in 1921.
According to this theory, Profit is the reward of uncertainty bearing. An entrepreneur obtains the profit for uncertainty bearing rather than risk taking function.
Prof. Knight divided the risks into two parts in order to clarify the risk Prof. Knight divi and uncertainty:
a. Direct taxes: Direct taxes includes taxes on income, profit, and capital gains, social security taxes, taxes on property, etc.
b. Indirect taxes: Indirect taxes includes taxes on goods and service
(VAT, excise duty, taxes on specific services, etc.) and taxes on international trade and transactions (custom and other import duties, and export taxes). It has highest contribution to the total tax revenue o Nepal.
c. Other taxes: Other taxes include registration fee and ownership
certificate charges.
➢Non-tax Revenue
Non-tax revenue includes property income, receipts from sales of goods and services, penalties, fines and forfeiture, voluntary transfers other than grants(gifts), immigration and travel fees, administrative fees, etc. In the fiscal year 2019/20, the total revenue collected by Government of Nepal from non-tax sources was Rs. 9369.12, which is 10.90 percent of the total revenue of the Government of Nepal.
➢Foreign Grants
Foreign grants are also sources of government revenue in Nepal. It occupies large share in the regular budget of the Government of Nepal. In the fiscal year 2019/20, the total revenue collected by Government of Nepal was Rs. 1919.16 crore which is 2.20 percent of the total revenue.
➢Cash Reserve, Irregularities Recovery and Repayment of Internal Loan Investment
Cash reserve, irregularities recovery and repayment of internal debt are also the sources of revenue of Government of Nepal. In the fiscal year 2019/20, the total revenue of the Government of Nepal from this source was Rs. 4935.40 crore which is 5.70 percent of the total revenue.
22. Construct a frequency distribution table from the marks obtained by class 10 students in economics subject having full marks of 75 with the first class interval as 0-10 and calculate the simple arithmetic mean and interpret the result.
Obtained Marks: 5, 10, 15, 25, 55, 5, 15, 10, 25, 50, 10, 5, 15, 55, 5, 10, 35, 25, 45, 45, 10, 25, 5, 35, 30, 5, 55,5,25,55
Group "A"
Very Short Answer Questions. (11*1=11)
1. What is the addition of expenditure incurred in fixed factors used in the short-run production process?Answer: Â The addition of expenditure incurred on fixed factors used in short-run production process referred as total fixed cost.
2. If the total revenue is Rs.18 and Rs.24, respectively when selling the 3rd and 4th unit of a commodity, find the marginal revenue from the sale of the 4th unit.
Answer:Â Solution,
Marginal Revenue (MR) = Change in Total Revenue / Change in Quantity Sold
Then,
Change in Total revenue (TR) = 24-18 = Rs. 6
Change in Quantity sold = 4-3 = 1
Now,
MR= Change in TR / Change in Quantity sold = 6/1 = Rs. 6Â ans.
3. Mention any two characteristics of a Monopoly market.
Answer:Â Any two characteristics of a monopoly market are:
➢A single seller and large number of buyers.
➢No close substitute.
4.What is the effect on real wages when price level increases?
Answer:Â When the price level increases, real wages decrease as the purchasing power of income diminishes.
5.Write any two difficulties of barter system.
Answer:Â Any two difficulties of barter system are:
➢Lack of common measure value.Â
➢Lack of standard of deferred payment.
6.What type of money is called inconvertible paper money?
Answer:Â The money cannot be converted into gold and sliver as per the need is called inconvertible paper money.
7.Write any two examples of direct tax.
Answer:Â Any two examples of direct tax are:
➢Property tax.
➢Income tax.
8.With which theory of economic development the materialist interpretation of history is associated?
Answer:Â The theory of economic development the materialist interpretation of history is associated with the German economist and philosopher Karl Marx.
9.Who propounded the comparative cost theory of international trade?
Answer:Â The comparative cost theory of international trade was propounded by the classical economist, David Ricardo in 1817.
10.What is the situation which a country's exports visible goods exceed its imports with the rest of the world in the certain period?
Answer:Â When a country exports more visible goods than it imports from the rest of the world in a certain period, it known as a trade surplus.
11.Mention two methods of collecting data.
Answer:Any two methods of collecting data are:
➢Primary data collection method.
➢Secondary data collection method.
Group "B"Short Answer Question. (8*5=40)
12. Fill the appropriate value in the blank spaces of the given table then construct AR and MR curves in a single diagram.)13. Consider the table and answer the following questions:
b)Â Answer:In Figure, X-axis represents the quantity demanded and supplied of a product whereas Y-axis represents the price. These two curves are intersecting each other at the point E. The point E is the equilibrium point. Hence, the equilibrium price is Rs. 3 and the equilibrium quantity is 6 units.
C)Â Answer:Â In the figure, when market price is below than Rs. 3, demand is greater than supply, i.e. D > S. When market price is above Rs. 3, Supply is greater than demand, i.e. S > D. At market price Rs. 3 demand is equal to supply. That is why, Rs. 3 is the equilibrium price and the equilibrium quantity is 6 units determine by the market or industry.
14. Explain the Subsistence Theory of Wages highlighting its main ideas.
Answer:Â The subsistence theory of wages was developed by David Ricardo and other classical economists. This theory is based on population theory of Thomas Robert Malthus. It is also known and Iron law of wages and Iron .
According to this theory. Wages are determined by the cost of re determi production of labour or subsistence level.
This theory is based on following assumption:
➢Population increases at faster rate.
➢There is no existence of trade union.
➢The cost of production of labour is equal to subsistence wage.
➢It is based on long run concept.
This theory says that if the wages increases above the Subsistence level, this leads to increase in population. They are encouraged to marry more wives and bear large number of children. The increase in population means the increase in supply of labour. The increased Competition labours for employment causes wages to fall again to the subsistence level.
Similarly, if the wages rate declines below the subsistence level population automatically decreases by malnutrition starvation, diseases etc people will have less interest marriage and birth. This will reduce labour supply. It helps to increase the wage rate at the minimum subsistence level.
OR,
14. Explain the role of uncertainty in the profit generation based on the Uncertainty- Bearing Theory of Profit.
Answer:Â The Uncertainty-bearing Theory of Profit was propounded by the American economist, Prof. Knight in his book entitled Risk Uncertainty and Profit, published in 1921.
According to this theory, Profit is the reward of uncertainty bearing. An entrepreneur obtains the profit for uncertainty bearing rather than risk taking function.
Prof. Knight divided the risks into two parts in order to clarify the risk Prof. Knight divi and uncertainty:
➢Insurable Risks: The risk which are insurable or predictable are known as insurable risk. For Example: Fire, Accidents, theft etc.
➢Non-Insurable Risk: The risk which are non- insurable and unpredictable are known as non-insurable risks. For example: Change in fashion, habits, innovation etc.
15. List and explain any five indicators of economic development.
Answer:Â Any five indicators of economic development are explained below:
➢Gross Domestic Product (GDP): GDP is like a country's total earnings. It measures the total value of all goods and services produced within a country. If the GDP is high, it means the country is making a lot of stuff and providing many services, which is good for its development.
➢Employment Rate: Employment rate shows how many people have jobs compared to the total working-age population. If more people have jobs, it's a positive sign. It means the country is creating opportunities for its citizens to work and earn a living.
➢Literacy Rate: Literacy rate is the percentage of people who can read
and write in a country. Higher literacy rates mean more people are educated, which helps a country progress because educated people can contribute more to the economy.
➢Life Expectancy: Life expectancy is how long, on average, people can expect to live in a country. If life expectancy is high, it suggests that people have access to good healthcare and a decent quality of life, which are important for economic development.
➢Infrastructure Development: Infrastructure includes things like roads, bridges, electricity, and water supply systems. If a country has good infrastructure, it's easier for businesses to operate and for people to live comfortably, contributing to economic development.
17. Explain the main components of an economic plan.
Answer:An economic plan typically consists of several key components that aim to guide a country's economic activities. Here are the main components which are explained below:
➢Goals and Objectives: This is like setting a target or goal for the country's economy. It could be things like reducing unemployment, I increasing production, or controlling inflation. It's like deciding what you want to achieve.
➢ Budget: Just like you plan how much money you can spend on different things each month, a country plans its spending and income. This includes deciding how much money to spend on schools, healthcare, defense, and other important areas.
➢Taxation: This is like the government's way of collecting money. Just like you pay taxes when you buy something, the government decides how much everyone should pay in taxes to fund its plans and projects.
➢Monetary Policy: This involves decisions about how much money is
circulating in the country. It's like making sure there's not too much money that can lead to inflation (prices going up too fast) or too little that can lead to a slow economy.
➢Regulations: Think of this like rules that everyone needs to follow in the economic game. It could involve rules for businesses, workers, and consumers. The government sets these rules to make sure everything is fair and works well.
18. Describe various methods used for classifying data, highlighting the situation of practical applications of each method.
Answer:Â The various methods used for classifying data and situation of practical applications of each method are explained below:
➢Geographical Classification
Description: Sorting data based on the geographical location.
Practical application: Useful for trade analysis and understanding the impact of climate on the production of certain goods.
➢Chronological Classification
Description: Sorting data based on time periods.
Practical application: Valuable for studying economic trends over time and making predictions for the future.
➢Qualitative Classification
Description: Sorting data based on characteristics or qualities.
Practical Applications: Useful in analyzing consumer preferences for different types of products, aiding businesses in targeted marketing.
➢Quantitative Classification
Descriptions: Softing data based on numerical values.Â
➢Non-Insurable Risk: The risk which are non- insurable and unpredictable are known as non-insurable risks. For example: Change in fashion, habits, innovation etc.
15. List and explain any five indicators of economic development.
Answer:Â Any five indicators of economic development are explained below:
➢Gross Domestic Product (GDP): GDP is like a country's total earnings. It measures the total value of all goods and services produced within a country. If the GDP is high, it means the country is making a lot of stuff and providing many services, which is good for its development.
➢Employment Rate: Employment rate shows how many people have jobs compared to the total working-age population. If more people have jobs, it's a positive sign. It means the country is creating opportunities for its citizens to work and earn a living.
➢Literacy Rate: Literacy rate is the percentage of people who can read
and write in a country. Higher literacy rates mean more people are educated, which helps a country progress because educated people can contribute more to the economy.
➢Life Expectancy: Life expectancy is how long, on average, people can expect to live in a country. If life expectancy is high, it suggests that people have access to good healthcare and a decent quality of life, which are important for economic development.
➢Infrastructure Development: Infrastructure includes things like roads, bridges, electricity, and water supply systems. If a country has good infrastructure, it's easier for businesses to operate and for people to live comfortably, contributing to economic development.
17. Explain the main components of an economic plan.
Answer:An economic plan typically consists of several key components that aim to guide a country's economic activities. Here are the main components which are explained below:
➢Goals and Objectives: This is like setting a target or goal for the country's economy. It could be things like reducing unemployment, I increasing production, or controlling inflation. It's like deciding what you want to achieve.
➢ Budget: Just like you plan how much money you can spend on different things each month, a country plans its spending and income. This includes deciding how much money to spend on schools, healthcare, defense, and other important areas.
➢Taxation: This is like the government's way of collecting money. Just like you pay taxes when you buy something, the government decides how much everyone should pay in taxes to fund its plans and projects.
➢Monetary Policy: This involves decisions about how much money is
circulating in the country. It's like making sure there's not too much money that can lead to inflation (prices going up too fast) or too little that can lead to a slow economy.
➢Regulations: Think of this like rules that everyone needs to follow in the economic game. It could involve rules for businesses, workers, and consumers. The government sets these rules to make sure everything is fair and works well.
18. Describe various methods used for classifying data, highlighting the situation of practical applications of each method.
Answer:Â The various methods used for classifying data and situation of practical applications of each method are explained below:
➢Geographical Classification
Description: Sorting data based on the geographical location.
Practical application: Useful for trade analysis and understanding the impact of climate on the production of certain goods.
➢Chronological Classification
Description: Sorting data based on time periods.
Practical application: Valuable for studying economic trends over time and making predictions for the future.
➢Qualitative Classification
Description: Sorting data based on characteristics or qualities.
Practical Applications: Useful in analyzing consumer preferences for different types of products, aiding businesses in targeted marketing.
➢Quantitative Classification
Descriptions: Softing data based on numerical values.Â
Practical Applications: Helps governments and organizations understand income disparities among nations for effective policymaking.
19. Show the given data in a pie chart.
19. Show the given data in a pie chart.
GROUP "C"
Write long answer to the following questions. ( 3*8=24)
20.Explain how the commercial banks can contribute to the economic development of Nepal.
Answer:Â The Commercial banks play a vital role in the economic development of Nepal which are explained below:
➢Savings and Safety: Commercial banks provide a safe place for people
to keep their money. When people save money in banks, it can be used to invest in projects that help the country economic development grow.
➢Loans for Businesses: Banks give loans to businesses that want to
start or expand. These loans help businesses buy equipment, hire more people, and grow, which creates more jobs and boosts the economy.
➢Support for Agriculture: In a country like Nepal, where agriculture is
crucial, banks can provide loans to farmers. This money helps them buy seeds, tools, and improve farming techniques, leading to better harvests and increased income.
➢Entrepreneurial Support: Banks support people who want to start
T their own businesses. By offering loans and financial advice, banks encourage entrepreneurship, which is essential for a country's economic development.
➢Infrastructure Projects: Commercial banks can finance big projects
like building roads, bridges, and other infrastructure. This improves transportation and connectivity, making it easier for businesses to operate and people to access different areas.
➢Education and Skill Development: Banks can support education by
providing loans for students to attend schools and colleges. This helps in creating a skilled workforce, which is essential for a country's progress.
➢Encouraging Saving Culture: Banks encourage people to save money
by offering interest on savings accounts. This not only helps individuals secure their future but also provides banks with more funds to invest in economic development.
➢Foreign Trade: Banks facilitate international trade by providing services like foreign exchange and letters of credit. This promotes the export and import of goods, contributing to the overall economic growth of the country.
21.Evaluate the sources of government revenue of Nepal.
Answer:The government has to perform many functions for the welfare of its people. These functions cannot be performed without aid of money. If the government wants to provide more welfare facilities to its citizens, it has to think of from where and how the revenue should be raised. Simply, government revenue implies the income raised from the public by the government through taxes, and non-taxes sources (fees, fines, penalties, gifts, etc.) and foreign grants, etc. The sources of government revenue in Nepal can be divided into the following four divided i types:
1. Tax Revenue
2. Non-tax Revenue
3. Foreign Grants
4. Cash Reserve, Irregularities Recovery and Repayment Debt.
➢Tax Revenue
Tax revenue is the major source of government revenue in Nepal. It has the highest contribution to the total government revenue in Nepal. Table shows that total tax revenue collected by Government of Nepal in the fiscal year 2019/20 was Rs. 70,005.55 crore. This is 81.20 percent of the total revenue. The tax revenue of Government of Nepal can be divided into following three types:
Answer:Â The Commercial banks play a vital role in the economic development of Nepal which are explained below:
➢Savings and Safety: Commercial banks provide a safe place for people
to keep their money. When people save money in banks, it can be used to invest in projects that help the country economic development grow.
➢Loans for Businesses: Banks give loans to businesses that want to
start or expand. These loans help businesses buy equipment, hire more people, and grow, which creates more jobs and boosts the economy.
➢Support for Agriculture: In a country like Nepal, where agriculture is
crucial, banks can provide loans to farmers. This money helps them buy seeds, tools, and improve farming techniques, leading to better harvests and increased income.
➢Entrepreneurial Support: Banks support people who want to start
T their own businesses. By offering loans and financial advice, banks encourage entrepreneurship, which is essential for a country's economic development.
➢Infrastructure Projects: Commercial banks can finance big projects
like building roads, bridges, and other infrastructure. This improves transportation and connectivity, making it easier for businesses to operate and people to access different areas.
➢Education and Skill Development: Banks can support education by
providing loans for students to attend schools and colleges. This helps in creating a skilled workforce, which is essential for a country's progress.
➢Encouraging Saving Culture: Banks encourage people to save money
by offering interest on savings accounts. This not only helps individuals secure their future but also provides banks with more funds to invest in economic development.
➢Foreign Trade: Banks facilitate international trade by providing services like foreign exchange and letters of credit. This promotes the export and import of goods, contributing to the overall economic growth of the country.
21.Evaluate the sources of government revenue of Nepal.
Answer:The government has to perform many functions for the welfare of its people. These functions cannot be performed without aid of money. If the government wants to provide more welfare facilities to its citizens, it has to think of from where and how the revenue should be raised. Simply, government revenue implies the income raised from the public by the government through taxes, and non-taxes sources (fees, fines, penalties, gifts, etc.) and foreign grants, etc. The sources of government revenue in Nepal can be divided into the following four divided i types:
1. Tax Revenue
2. Non-tax Revenue
3. Foreign Grants
4. Cash Reserve, Irregularities Recovery and Repayment Debt.
➢Tax Revenue
Tax revenue is the major source of government revenue in Nepal. It has the highest contribution to the total government revenue in Nepal. Table shows that total tax revenue collected by Government of Nepal in the fiscal year 2019/20 was Rs. 70,005.55 crore. This is 81.20 percent of the total revenue. The tax revenue of Government of Nepal can be divided into following three types:
a. Direct taxes: Direct taxes includes taxes on income, profit, and capital gains, social security taxes, taxes on property, etc.
b. Indirect taxes: Indirect taxes includes taxes on goods and service
(VAT, excise duty, taxes on specific services, etc.) and taxes on international trade and transactions (custom and other import duties, and export taxes). It has highest contribution to the total tax revenue o Nepal.
c. Other taxes: Other taxes include registration fee and ownership
certificate charges.
➢Non-tax Revenue
Non-tax revenue includes property income, receipts from sales of goods and services, penalties, fines and forfeiture, voluntary transfers other than grants(gifts), immigration and travel fees, administrative fees, etc. In the fiscal year 2019/20, the total revenue collected by Government of Nepal from non-tax sources was Rs. 9369.12, which is 10.90 percent of the total revenue of the Government of Nepal.
➢Foreign Grants
Foreign grants are also sources of government revenue in Nepal. It occupies large share in the regular budget of the Government of Nepal. In the fiscal year 2019/20, the total revenue collected by Government of Nepal was Rs. 1919.16 crore which is 2.20 percent of the total revenue.
➢Cash Reserve, Irregularities Recovery and Repayment of Internal Loan Investment
Cash reserve, irregularities recovery and repayment of internal debt are also the sources of revenue of Government of Nepal. In the fiscal year 2019/20, the total revenue of the Government of Nepal from this source was Rs. 4935.40 crore which is 5.70 percent of the total revenue.
22. Construct a frequency distribution table from the marks obtained by class 10 students in economics subject having full marks of 75 with the first class interval as 0-10 and calculate the simple arithmetic mean and interpret the result.
Obtained Marks: 5, 10, 15, 25, 55, 5, 15, 10, 25, 50, 10, 5, 15, 55, 5, 10, 35, 25, 45, 45, 10, 25, 5, 35, 30, 5, 55,5,25,55
Answer:
OR
Construct a Price Index using Laspeyre's and Paasche's method from the given data assuming 2020 as the base year and 2023 as the current year and draw conclusion based on the results.
OR
Construct a Price Index using Laspeyre's and Paasche's method from the given data assuming 2020 as the base year and 2023 as the current year and draw conclusion based on the results.
Answer:
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