AHSEC| CLASS 11| ECONOMICS| SOLVED PAPER

AHSEC| CLASS 11| ECONOMICS| SOLVED PAPER - 2024| H.S. 1ST YEAR

2024
ECONOMICS
Full Marks: 80
Pass Marks: 24
Time: 3 hours
The figures in the margin indicate full marks for the questions

PART-A

(Introductory Microeconomics)

1. Answer the following as directed: 1x6=6

(a) Define utility.

Ans:- Utility in economics refers to the satisfaction or benefit a consumer derives from the consumption of a good or service.

(b) What is budget line?

Ans:- The budget line shows all possible combinations of two commodities that a consumer can purchase based on his income and the prices of the commodities.

(c) Draw a perfectly elastic demand curve.

Ans:-

(d) State the law of supply.

Ans:- The law of supply states that, other things being equal, as the price of a commodity rises, the quantity supplied also rises, and vice versa.

(e) TC = TVC + TFC. (Fill in the blank)

(f) What is meant by equilibrium price?

Ans:- The equilibrium price is the price at which the quantity demanded by consumers is equal to the quantity supplied by producers, resulting in no surplus or shortage in the market.

2. Answer the following questions: 2×6=12

(a) Write two differences between micro- and macro- economics.

Ans:- Two differences between microeconomics and macroeconomics:-

(i) Scope: Microeconomics focuses on individual units, such as households, firms and industries, analysing supply, demand and price levels in specific markets. Macroeconomics examines the economy as a whole, dealing with aggregate measures such as gross domestic product, inflation and unemployment.

(ii) Approach: Microeconomics takes a bottom-up approach by studying smaller economic components to understand broad trends. Macroeconomics takes a top-down approach, analysing large-scale economic policies and their impact on national or global economies.

State two characteristics of production possibility curve.

Ans:- Two characteristics of the production possibility curve (PPC):-

(i) Representation of scarcity: The PPC shows the limited availability of resources and the trade-offs involved when choosing between the production of two goods.

(ii) Opportunity cost: The curve shows that in order to produce more of one good, some amount of the other good has to be sacrificed due to resource scarcity. Tilted PPC represents increased opportunity cost.

(b) Define: 1+1=2

(i) Microeconomics

Ans:- Microeconomics: Microeconomics is a branch of economics that studies the behaviour of individuals, households and businesses in making decisions about the allocation of scarce resources. It focuses on how these decisions affect supply, demand, pricing and resource distribution in individual markets as opposed to the entire economy.

(ii) Opportunity cost

Ans:- Opportunity cost: Opportunity cost refers to the value of the best alternative given up when choosing an alternative. It reflects the benefits that an individual or business misses out on by choosing one alternative over another.

Write any two central problems facing an economy. 2

Ans:- Two main problems facing the economy:-

(i) What to produce: deciding which goods and services should be produced and in what quantities.

(ii) How to produce: choosing the method of production, whether labor-intensive or capital-intensive.

(c) State the law of diminishing marginal utility. 2

Ans:- Law of diminishing marginal utility: This law states that as a person consumes more units of a commodity, the additional satisfaction (marginal utility) derived from each successive unit diminishes.

A 20% fall in the price of a commodity leads to 25% increase in demand. Calculate the price elasticity of demand.

(d) Define production function. Write one feature of it. 1+1=2

Ans:- Definition: The production function shows the relationship between the inputs (such as labour and capital) and the output produced.

Feature: It assumes that technology remains constant during the analysis.

Write two differences between fixed cost and variable cost. 2

Ans:- Two differences between fixed cost and variable cost:-

(e) Define monopoly market. State one feature of it. 1+1=2

Ans:- Definition: Monopoly is a market structure where a single seller dominates the market and there are no close substitutes for the product.

Feature: The monopolist has significant control over prices.

Write two assumptions of perfect competition.

Ans:- Two assumptions of perfect competition:-

(i) A large number of buyers and sellers exist in the market.

(ii) Homogeneous products are offered by all firms.

(f) Explain the chain of effects of excess supply on equilibrium price.

Ans:- Chain of effects of excess supply on equilibrium price: Excess supply causes unsold stocks, forcing producers to lower prices to attract buyers. This continues until the equilibrium price is restored where demand equals supply.

Distinguish between price ceiling and price floor.

Ans:- Difference between price ceiling and price floor:-