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HSC Economics Board Question Paper March 2022 Solution | Maharashtra Board

HSC Economics Board Paper 2022
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Board Question Paper : March 2022

ECONOMICS

Time: 3 Hrs. Max. Marks: 80
Notes:
  1. All questions are compulsory.
  2. Draw neat tables/diagrams wherever necessary.
  3. Figures to the right indicate full marks.
  4. Write answers to all main questions on new page.

Q.1. (A) Complete the correlations:

(5 Marks)
(i) Macro Economics : _________ : : Micro Economics : Price theory
Answer: Income theory (or Theory of Income and Employment)
(ii) Direct demand : Food and Mobiles : : _________ : Land and Labour.
Answer: Indirect demand (or Derived demand)
(iii) Perfectly elastic demand : Ed = ∞ : : _________ : Ed = 1.
Answer: Unitary elastic demand
(iv) Output method : Product method : : _________ : Factor cost method.
Answer: Income method
(v) Personal income tax : _________ : : Goods and service tax (GST) : Indirect tax.
Answer: Direct tax

Economics Board Questions with Solution

Q.1. (B) Give economic terms:

(5 Marks)
(i) Additional utility derived by a consumer from an additional unit consumed.
Answer: Marginal Utility (MU)
(ii) Price being constant, demand falls due to unfavorable change in other factors.
Answer: Decrease in demand
(iii) Revenue per unit of output sold.
Answer: Average Revenue (AR)
(iv) Period in which all factors of production are variable.
Answer: Long run
(v) The gross market value of all final goods and services produced within the domestic territory of a country during a period of a year.
Answer: Gross Domestic Product (GDP)

Q.1. (C) Complete the following statements:

(5 Marks)
(i) Whole Economy is studied in _______.
  • (a) Micro Economics
  • (b) Macro Economics
  • (c) Econometrics
  • (d) Natural Sciences
Answer: (b) Macro Economics
(ii) When percentage change in quantity demanded is less than percentage change in price, the demand curve is _______.
  • (a) Flatter
  • (b) Steeper
  • (c) Rectangular hyperbola
  • (d) Horizontal
Answer: (b) Steeper
Reason: Ed < 1 (Relatively Inelastic Demand) has a steeper curve.
(iii) The cost incurred by the firm to promote sales _______.
  • (a) Total cost
  • (b) Average cost
  • (c) Marginal cost
  • (d) Selling cost
Answer: (d) Selling cost
(iv) Budget that consists of revenue receipts and revenue expenditure _______.
  • (a) Capital budget
  • (b) Government budget
  • (c) Revenue budget
  • (d) Family budget
Answer: (c) Revenue budget
(v) Purchase of goods and services from one country and selling them to another country is _______.
  • (a) Entrepot trade
  • (b) Import trade
  • (c) Export trade
  • (d) National trade
Answer: (a) Entrepot trade

Q.1. (D) Assertion and reasoning questions:

(5 Marks)
(i) Assertion (A): Marginal utility (MU) goes on diminishing.
Reasoning (R): Total utility (TU) increases at diminishing rate.
Answer: (c) Both statements A and R are true and R is the correct explanation of A.
(ii) Assertion (A): With rising price, supply of commodity falls.
Reasoning (R): Seller earns more profit at higher price.
Answer: (b) Assertion (A) is false but Reasoning (R) is true.
(iii) Assertion (A): Index number considers all factors.
Reasoning (R): Index number is based on samples.
Answer: (b) Assertion (A) is false but Reasoning (R) is true.
(iv) Assertion (A): Money market economises use of cash.
Reasoning (R): Money market does not deal with financial instruments that are close substitutes of money.
Answer: (a) Assertion (A) is true but Reasoning (R) is false.
Correction: Money market deals with instruments that ARE close substitutes for money.
(v) Assertion (A): International trade leads to division of labour and specialisation.
Reasoning (R): India’s national trade is not increasing.
Answer: (a) Assertion (A) is true but Reasoning (R) is false.

Q.2. (A) Identify and explain the following concepts (Any THREE):

(6 Marks)
(i) Asha collected the information about the income of a particular firm.
Answer:

Identified Concept: Micro Economics (Study of individual unit).

Explanation: Micro economics is the study of the behavior of small individual economic units, such as individual firms, individual prices, individual households, etc. Since Asha is collecting data on a "particular firm," it falls under the scope of Micro Economics.

(ii) Ramesh’s demand for salt remained unchanged inspite of a 10% rise in its price.
Answer:

Identified Concept: Perfectly Inelastic Demand.

Explanation: When a percentage change in price leads to no change in the quantity demanded, it is known as perfectly inelastic demand. In this case, $Ed = 0$. Salt is a necessity, so its demand typically remains unchanged despite price fluctuations.

(iii) Out of 4000 kgs of rice the farmer offered to sale 1000 kgs of rice in the market at ₹ 40 per kg.
Answer:

Identified Concept: Individual Supply.

Explanation: Supply is that part of the stock which a seller is willing and able to offer for sale at a specific price during a specific period. Here, 1000 kgs is the actual quantity offered for sale (Supply), while 4000 kgs is the Stock.

(iv) Shobha collected data regarding the money value of all final goods and services produced in the country for the financial year 2019-20.
Answer:

Identified Concept: National Income (Product Method/Output Method).

Explanation: National Income is the total money value of all final goods and services produced within the domestic territory of a country during a given year. Collecting such aggregate data represents the calculation of National Income.

(v) Lucy deposited a lumpsum amount of ₹ 1,00,000/- in the Bank of India for the period of one year.
Answer:

Identified Concept: Fixed Deposit (Time Deposit).

Explanation: A Fixed Deposit is a type of account where a lump sum amount is deposited by a customer for a specific fixed period of time (e.g., one year). It carries a higher rate of interest compared to savings accounts and cannot be withdrawn before maturity without a penalty.

Q.2. (B) Distinguish between (Any THREE):

(6 Marks)
(i) Slicing method and lumping method.
Answer:
Slicing Method Lumping Method
Used in Micro Economics. Used in Macro Economics.
It splits or slices the economy into small individual units (e.g., individual income, individual demand) and studies them in detail. It lumps or groups the whole economy together (e.g., National Income, Aggregate Demand) and studies it as a whole.
(ii) Joint/complementary demand and competitive demand.
Answer:
Joint/Complementary Demand Competitive Demand
When two or more goods are demanded together to satisfy a single want. When two goods are substitutes for each other and can satisfy the same want.
Example: Car and Petrol, Pen and Ink. Example: Tea and Coffee, Sugar and Jaggery.
(iii) Total revenue and marginal revenue.
Answer:
Total Revenue (TR) Marginal Revenue (MR)
It is the total income earned by a firm from the sale of a given quantity of commodity. It is the net addition made to total revenue by selling one extra unit of the commodity.
Formula: $TR = Price \times Quantity$ Formula: $MR = TR_n - TR_{n-1}$
(iv) Price Index Number and Quantity Index Number.
Answer:
Price Index Number Quantity Index Number
It measures the general changes in the prices of goods between two periods. It measures the changes in the level of output or physical volume of production in the economy.
It is used to measure inflation and value of money. It is used to measure changes in agricultural and industrial production.
(v) Internal debt and External debt.
Answer:
Internal Debt External Debt
Debt raised by the government within the country (from citizens, banks, etc.). Debt raised by the government from outside the country (foreign governments, IMF, World Bank).
It is in domestic currency and does not involve the drain of resources. It is in foreign currency and involves the payment of interest to foreign entities.

Q.3. Answer the following (Any THREE):

(12 Marks)
(i) Explain the scope of macro economics.
Answer:

The scope of Macro Economics explains the subject matter it covers. It includes:

  1. Theory of Income and Employment: Macro economics analyzes the factors determining the level of national income and employment. It studies consumption function and investment function to understand business cycles.
  2. Theory of General Price Level and Inflation: It studies how the general price level is determined and the causes of fluctuations in it (inflation and deflation).
  3. Theory of Growth and Development: It studies the causes of underdevelopment and poverty in poor countries and suggests strategies for accelerating growth.
  4. Macro Theory of Distribution: It deals with the relative shares of rent, wages, interest, and profit in the total national income.
(ii) Explain any four features of monopoly.
Answer:
  1. Single Seller: In a monopoly, there is only one seller or producer of the commodity, but there are many buyers.
  2. No Close Substitutes: The product sold by the monopolist has no close substitutes. Buyers have no choice but to buy from the monopolist or go without it.
  3. Barriers to Entry: Entry of new firms into the industry is restricted due to legal, natural, or technological barriers.
  4. Price Maker: The monopolist has complete control over the supply of the product and can fix the price. Hence, a monopolist is a price maker, not a price taker.
(iii) Elaborate any four features of utility.
Answer:
  1. Relative Concept: Utility is related to time and place. Woolen clothes have utility in winter but not summer; sand has utility at a construction site but not at a riverbank.
  2. Subjective Concept: Utility is a psychological concept and differs from person to person. A book has utility for a literate person but not for an illiterate one.
  3. Ethically Neutral: The concept of utility has no ethical consideration. A knife has utility for a housewife to cut vegetables and for a killer to harm someone; economics considers both as utility.
  4. Differs from Usefulness: A commodity may have utility but not usefulness. For example, liquor has utility for an addict but is harmful (not useful) to health.
(iv) Write any four practical difficulties in national income estimation.
Answer:
  1. Problem of Double Counting: The greatest difficulty is distinguishing between final goods and intermediate goods. If intermediate goods are counted, it leads to double counting and overestimation of NI.
  2. Existence of Non-Monetized Sector: In developing countries like India, a significant part of production (especially agriculture) is for self-consumption and is exchanged through barter, leading to underestimation.
  3. Inadequate and Unreliable Data: Data regarding production, cost, and small-scale industries is often unavailable or unreliable due to illiteracy and lack of record-keeping.
  4. Valuation of Inventories: Raw materials, intermediate goods, and semi-finished products in stock must be valued. Mistakes in valuing these inventories can distort NI estimates.
(v) Explain the Ratio method of measuring price elasticity of demand.
Answer:

The Ratio Method (also known as the Percentage Method or Arithmetic Method) was developed by Prof. Marshall. According to this method, price elasticity of demand is measured by dividing the percentage change in quantity demanded by the percentage change in price.

Formula:

$$Ed = \frac{\%\text{ Change in Quantity Demanded}}{\%\text{ Change in Price}}$$ $$Ed = \frac{\%\Delta Q}{\%\Delta P}$$

Mathematically:

$$Ed = \frac{\Delta Q}{Q} \times \frac{P}{\Delta P}$$

Where:

  • $Q$ = Original Quantity
  • $\Delta Q$ = Change in Quantity
  • $P$ = Original Price
  • $\Delta P$ = Change in Price

Q.4. State with reasons whether you agree or disagree with the following statements (Any THREE):

(12 Marks)
(i) There are no exceptions to the law of diminishing marginal utility.
Answer:

I Disagree.

Reason: There are several exceptions to the law of DMU where MU increases or remains constant with additional units:

  • Hobbies: For collectors (stamps, coins), every additional unit gives more pleasure.
  • Misers: Every additional rupee gives more satisfaction to a miser.
  • Addictions: For drunkards, the level of intoxication and utility increases with every additional drink.
  • Power: A person desires more power as they acquire some.
(ii) Supply curve of labour is backward bending.
Answer:

I Agree.

Reason:

  • Initially, as wage rates rise, a worker prefers to work more hours to earn more, so the supply of labour increases (upward sloping curve).
  • However, after a certain level of income is reached, the worker prefers leisure over work.
  • At very high wage rates, the worker reduces working hours to enjoy the earned income. Thus, the supply curve bends backward.
(iii) Price under perfect competition is decided by the interaction between demand and supply.
Answer:

I Agree.

Reason:

  • Under perfect competition, no single buyer or seller can influence the price.
  • The equilibrium price is determined by the intersection of the market demand curve and the market supply curve.
  • Marshall compared this to the two blades of a pair of scissors; both blades (demand and supply) are needed to cut the cloth (determine price).
(iv) Capital market plays an important role in India.
Answer:

I Agree.

Reason:

  • Mobilization of Savings: It mobilizes long-term savings from various sections of society.
  • Capital Formation: It channels these savings into productive investments, aiding capital formation.
  • Industrial Growth: It provides long-term funds to industries for expansion and modernization.
  • Technical Assistance: Financial institutions in the capital market provide technical and consultancy services.
(v) Balance of Payment is same as Balance of Trade.
Answer:

I Disagree.

Reason:

  • Balance of Trade (BoT): It is the difference between the value of a country's exports and imports of visible goods only. It is a narrow concept.
  • Balance of Payments (BoP): It is a systematic record of all economic transactions (goods, services, and capital transfers) between residents of a country and the rest of the world. It is a broader concept including BoT.

Q.5. Study the following table, figure, passage and answer the questions given below it (Any TWO):

(8 Marks)
(i) Study the table and calculate GDP and NDP.
Components₹ Crores
Consumption (C)800/-
Investment (I)700/-
Government Expenditure (G)400/-
Net Export (X-M)-150/-
Depreciation (D)100/-
Answer:

(1) Calculate GDP (Gross Domestic Product):

$$GDP = C + I + G + (X - M)$$ $$GDP = 800 + 700 + 400 + (-150)$$ $$GDP = 1900 - 150 = 1750 \text{ Crores}$$

(2) Calculate NDP (Net Domestic Product):

$$NDP = GDP - Depreciation$$ $$NDP = 1750 - 100$$ $$NDP = 1650 \text{ Crores}$$
(ii) Identify the price elasticity of demand from the following diagrams:
Diagram (1)

Vertical Line Parallel to Y-axis

Diagram (2)

Horizontal Line Parallel to X-axis

Diagram (3)

Steep Curve ($\%\Delta P > \%\Delta Q$)

Diagram (4)

Flatter Curve ($\%\Delta Q > \%\Delta P$)

Answer:
  1. Diagram (1): Perfectly Inelastic Demand ($Ed = 0$).
  2. Diagram (2): Perfectly Elastic Demand ($Ed = \infty$).
  3. Diagram (3): Relatively Inelastic Demand ($Ed < 1$).
  4. Diagram (4): Relatively Elastic Demand ($Ed > 1$).
(iii) Passage about Commercial Banks and Nationalisation.

(Passage Text: Commercial banks act as intermediaries... Due to bank nationalisation in 1969... services like safe deposit lockers...)

Answer:

(1) Write any two benefits of Bank nationalisation.

  • Increase in loan disbursement in urban and rural areas.
  • Agriculture and retail traders started getting more loans.

(2) Write various services provided by banks.

Safe deposit lockers, D-mat facility, internet banking, mobile banking, etc.

(3) Write your opinion about the above passage.

The passage highlights the transformative role of commercial banks in India's development. Bank nationalisation in 1969 was a crucial step that shifted banking from "Class Banking" to "Mass Banking," ensuring credit access to neglected sectors like agriculture. The diversification into digital services shows that banks are modernizing to meet the financial needs of a growing economy.

Q.6. Answer the following questions in detail (Any TWO):

(16 Marks)
(i) Explain the concepts of variation and changes in demand with the help of diagrams.
Answer:

A. Variation in Demand

When the demand for a commodity changes only due to a change in its price, while other factors remain constant, it is called variation in demand. It is of two types:

  1. Expansion of Demand: Rise in quantity demanded due to a fall in price. It is shown by a downward movement on the same demand curve.
  2. Contraction of Demand: Fall in quantity demanded due to a rise in price. It is shown by an upward movement on the same demand curve.

B. Changes in Demand

When the demand for a commodity changes due to changes in other factors (like income, population, taste, etc.), while price remains constant, it is called changes in demand. It is of two types:

  1. Increase in Demand: More quantity is demanded at the same price. The demand curve shifts to the right.
  2. Decrease in Demand: Less quantity is demanded at the same price. The demand curve shifts to the left.

(Note: Students are expected to draw 4 separate diagrams: Expansion, Contraction, Increase, and Decrease).

(ii) Explain the meaning of index number. Explain various steps involved in the construction of index number.
Answer:

Meaning: An Index Number is a statistical device used to measure changes in an economic variable (like price or quantity) or a group of variables over a period of time.

Steps in Construction of Index Number:

  1. Purpose of Index Number: The scope and purpose must be clearly defined (e.g., for retail prices or wholesale prices) to select appropriate data.
  2. Selection of Base Year: A base year is the reference year against which comparisons are made. It should be a normal year (free from wars, calamities) and not too distant in the past.
  3. Selection of Items: A representative sample of commodities (basket of goods) should be selected based on the purpose (e.g., goods consumed by working class).
  4. Selection of Price Quotations: Accurate price data must be collected from reliable markets. Wholesale prices or retail prices are chosen based on requirements.
  5. Choice of Suitable Average: An arithmetic mean is commonly used because it is simple, though geometric mean is statistically more accurate.
  6. Selection of Proper Weight: Items should be given weights according to their relative importance (Quantity weights or Value weights).
  7. Selection of Suitable Formula: The appropriate formula (Laspeyre's, Paasche's, or Fisher's) must be chosen for calculation.
(iii) Explain various sources of public revenue.
Answer:

Public revenue refers to the aggregate collection of income by the government from various sources. The main sources are classified into Tax Revenue and Non-Tax Revenue.

1. Tax Revenue

A tax is a compulsory contribution from the person to the government without reference to special benefits conferred.

  • Direct Tax: Incidence and impact fall on the same person (e.g., Income Tax, Wealth Tax).
  • Indirect Tax: Incidence and impact fall on different persons. It is levied on goods and services (e.g., GST).

2. Non-Tax Revenue

  • Fees: Compulsory payment for a specific service rendered by the government (e.g., Education fee, Registration fee).
  • Prices of Public Goods/Services: Prices charged by public authorities for services like railway fares, postal charges.
  • Special Assessment: Payment by citizens in a particular locality in exchange for specific improvements (e.g., roads, street lights) that increase property value.
  • Fines and Penalties: Imposed on violators of laws to maintain order, not to earn revenue (e.g., Traffic fines).
  • Gifts, Grants, and Donations: Voluntary contributions during emergencies or foreign aid.
  • Special Levies: Duties levied on commodities harmful to health (e.g., on liquor/cigarettes).
  • Borrowings: Government borrows from internal and external sources to meet deficits.
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