NIOS Economics 214 Solved Paper’ April 2017, NIOS Secondary Solved Papers

NIOS Economics 214 Solved Paper’ April 2017

NIOS Secondary Solved Papers

1. Which one of the following is a positive statement?

(A) Government should increase the wage of labours.

(B) India has a large number of unemployed youth.

(C) Government should prove houses to poor people at low prices.

(D) Government should provide free education to all.

2. Which one of the following is a non-economic factor of economic development?

(A) Natural resources.  

(B) Racial factors.

(C) Capital formation    

(D) Technology

 3. The problem of ‘What good s and services shall be produced’ is related to

(A) Which goods and services are to be produced.

(B) The method by which goods and services are to be produced.

(C) Distribution of income and wealth in the society.

(D) Who is to enjoy and get the benefit of the goods and services produced.

4. A production unit owned by a single individual is known as

(A) A partnership.          

(B) A private company.

(C) Sole proprietorship.

(D) A public distribution unit.

5. Marginal revenue is

(A) The amount a seller receives by selling certain quantity of a commodity.

(B) Revenue per unit of the commodity sold.

(C) Increase in total revenue due to one unit increase in the sale of the quantity of output.

(D) The total amount of money received by the seller during a given time period.

6. Demand for a commodity refers to

(A) Quantity of the commodity that a buyer is willing to buy at a given price per unit of time.

(B) Quantity of the commodity purchased per unit of time

(C) Quantity of the commodity that a buyer is willing to buy

(D) Quantity of the commodity purchased at a given price.

7. Data means

(A) Quantitative and qualitative information

(B) Quantitative and qualitative information providing facts in aggregate manner.

(C) Qualitative information providing facts in aggregate manner

(D) Quantitative information providing facts in aggregate manner.

8. One of the major sources of water pollution is

(A) Exhaust of vehicles and automobiles.

(B) Discharge from sewage treatment plants.

(C) Vehicular traffic.

(D) Construction work on roads.

9. ‘Some wants arise again and again’. Justify this statement.                    2

Ans. Most wants recur. If they are satisfied once, they arise again after a certain period. We eat food and hunger is satisfied but after a few hours, we again feel hungry and we have to satisfy our hunger again with food. Therefore, hunger, thirst etc. are such wants which occur again and again.

10. What is meant by ‘entrepreneurship’ as a factor of production?                        2

Ans.  An entrepreneur is a person who combines the other factors of production – land, labour and capital – to earn a profit. The most successful entrepreneurs are innovators who find new ways produce goods and services.

11. Define fixed cost of production.                        2

Ans. Fixed cost is defined as the expenditure, on hiring or purchasing of fixed factors/inputs, which are compulsory and has nothing to do with the amount of production of the good or service.

12. The total cost of producing 15 units of a commodity is Rs. 195. Calculate the average cost of production.                    2

Ans. Average cost of production = Total cost/total units

                                                                   = 195/15

                                                                   = 13

13. How will the equilibrium price of a commodity be affected when its supply decreases but demand remains the same?                           2

Ans. When price of a commodity decreases but demand remains the same, Equilibrium price will increase.

14. How does public distribution system help the poor people?                               2

Ans. Poor people cannot afford to buy even the essential commodities at their market price. To help these people, one of the methods adopted in India is public distribution system under this system essential commodities like wheat, rice, sugar etc. are made available to the common man at cheaper rate through fair price shops called ration shops.

15. ‘Saving can act as a kind of security for future’ Explain with the help of an example.         2

Ans. Saving can act a kind of security for future. Suppose Mr. X falls ill in the beginning of this year. So he could not go to work for a week. How he can sustain for a week? There is no need to worry. He can always use his last ear’s saving to carry on for some time till he recovers from illness and start going to work and earn again.

16. Define ‘Central tendency’.                   2

Ans. Tendency of data to cluster towards the central location or value is called central tendency.

17. State any two main sources of air pollution.                               2

Ans. 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.

 18. Suggest any two ways by which we can contribute to sustainable development.                   2

Ans. Two ways by which we can contribute to sustainable development are:

1) Resources-finding substitutes for non-renewable resources and using renewable resources judiciously.

2) Recycling- to use again, to re-process. Water is a scarce resource yet we do not use water judiciously. We can reuse rainwater by rainwater harvesting.

19. What are producer services? Explain with the help of a suitable example.                   2

Ans. Producer services used to produce other goods and services, which are in turn demanded by the consumers. In other words producer services satisfy the human wants indirectly. For example a tailor stitches a shirt for a readymade garment shop.



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NIOS Secondary and Senior Secondary Solved Question Papers

20. Distinguish between a developed economy and a developing economy.                      4

Ans. Developed economy:-

(1) Developed countries have higher national and per-capita income, high rate of capital formation i.e. high savings and investment.

(2) They have highly educated human resources, better civic facilities, health and sanitation facilities, low birth rate, low death rate, low infant mortality etc.

(3) Developed countries have high standard of living

Developing economy:-

(1) The national and per capita income is low in these countries.

(2) They have backward agricultural and industrial sectors with low savings, investment and capital formation. Although these countries have export earnings but generally they export primary agricultural products.

(3) Developing countries have low standard of living and poor health and sanitation.

21. Distinguish between product based division of labour and process based division of labour with appropriate example.              4

Ans. Product based division of labour:- If a worker specializes in the production of a single good or service, it is called product based division of labour. In case of small farmers, a potter, a cobbler or a carpenter in a village we see that there is the use of product based division of labour. For example most of the farmers in our country make production of food grains mainly for self consumption. All of them make use of product based division of labour.

Process Based Division of labour:- In big production units like corporations and government enterprises where the production is made on a very large scale, there is the use of process based division of labour. In case of process based division of labour, the production of a commodity is divided into many processes and a worker specializes in one or two processes, that is called process based division of labour. For example Britannia Bread Company manufactures bread.

22. State any four main features of perfectly competitive market.                      4

Ans. Four main features of perfectly competitive market or perfect Competition

(a) Large number of sellers and buyers:- As against monopoly market, a competitive market has large number of sellers selling the commodity to a large number of buyers.

(b) Homogeneous product:- Under perfect competition only a single product is sold. This means all the sellers sell the same type of product to buyers. So the product is a perfect substitute.

(c) Free entry and exit:- Under perfect competition there is no bar on any new firm or producer to enter the market to sell or produce the product. Similarly if any existing seller wants to exit then he is free to do so.

(d) Every seller wants to earn maximum profit.

23. Explain any two functions of money.                              4

Ans. Money as ‘a medium of exchange ‘ and ‘a measure of value’

1. Medium of Exchange:- The primary function of money is that it acts as a medium of exchange. This means that people can buy or sell goods and services with the help of money. Money is received by the seller who sells the good. Money is paid by the buyer who buys the good from the seller.

Example you pay Rs. 10 to buy a pen. The seller receives Rs. 10 from you by selling the pen. So a pen is exchanged for Rs.10

2. Measure of Value:- Another fundamental function of money is that it serves as unit of account or common measure of value. The value of a good is determined by multiplying its price with quantity sold in the market. Since the price is expressed in monetary units, the value of a good is also expressed in monetary term.

Example Let price of rice be Rs. 20 per kilogram. One bag full or rice weights 25 kilograms. Then the value of the bag of rice is Rs. 20 x 25=Rs.500

24. How does a bank create credit? Explain with the help of a numerical example.                   4

Ans. There are two ways in which a bank create credit :-

By advancing loans on the cash credit basis or by an overdraft arrangement:

By purchasing securities and paying for them with its own cheques.

In both these cases, deposits are created (or credit is crated for the borrower), and the credit of the bank is embodied in a definite transaction. In all, a very small cash reserve is kept by the bank to meet the obligations arising out of these transactions, and the credit aggregates to a very big amount.

Let us see the actual process. Suppose a customer deposits Rs.1000 in a bank. The bank has to pay him interest, therefore the bank must seek a safe and profitable  investment for this amount. That is, it must lend it to somebody in order to earn interest. But this amount is not actually paid out to the borrowers, it is retained by the bank to meet its obligations, i.e., to pay to those of its depositors who need cash, and draw cheques for the purpose.

Suppose the bank in which a depositor has deposited Rs.1,000 keeps 20 per cent-cash reserve to meet the demand of depositors. This means that, as soon as the bank has received a deposit of Rs.1,000, it will, make up its mind to advance loans up-to the amount of Rs.5,000 (only one-fifth reserve is kept). When, therefore, a businessman comes to the bank with a request for a loan of Rs. 5,000, he may be sure of being granted accommodation to this extent, provided, of course, his credit is good.

25. Give meaning of an ‘individual series’ and a ‘discrete series’. Give one example of each.      4

Ans. Individual Series:- In this kind of series items are shown individually with their corresponding value. Each item has its separate and individual existence. Mass data in its original form are called raw data or unorganised data. But when they are arranged in ascending or descending order of magnitude, is called an array. Example marks obtain by 5 students in economics out of 100 are 40, 50, 35, 40 and 48.

Discrete Series:- This type of series is designed to show variables with definite break with their respective frequencies. Frequency refers to the repetitiveness of a value or item. If a particular value (X) appear 4 times in a set of data X will have a frequency of 4. Theoretically this kind of series is prepared only for a discrete variable. Example of discrete series:










No. of students









 26. Explain in any two ways the importance of data in economics.             4

Ans. Some specific areas of economics where the use of data is very important are as follows:

1. In economic planning:- The data of the previous years are generally used to prepare future plan. For example, it we have to plan expenditure to be incurred on primary education for a year, data regarding number of students who were enrolled up to class fifth in previous years and the expenditure incurred during those years is important to look at. Forecasting is done on the basis of economic planning.

2. To determine national income:- In order to know the state of our economy it is important to know the national income besides various other things. But national income can be determined by using certain methods which require quantitative information on various things such as wages and salaries received by workers, rent received for use of land and building, interest received for use of funds and profit earned by the entrepreneurs in the economy in the given ear.

27. Following table relates to weight of 100 students in a school Calculate arithmetic mean using short cut method.

Weight (kgs)







No. of students








Weight (kgs)

No. of students







A= assumption (55)
































28. Explain any two steps taken by the government to achieve higher economic growth.             4

Ans. Steps taken by the government for achieving higher economic growth are:

1. India has been encouraging establishment of small scale, large scale and heavy industries since the second plan onwards i.e. form 1956. These industries produce goods for the use of people, machines and equipments needed to build infrastructure and help service sector o expand. Industries provide lots of jobs and higher wages.

2. The government has been encouraging the use of better inputs in the form of better seeds, fertilizers etc. to improve food grain production.

29. Compare in any four ways the Indian economy with that of China.                   4

Ans. China’s national income and per capita income are growing faster than India’s. During the first half of 2010 China has 10 percent share in the total world exports as compared to only 1.4 percent for India. in the area of controlling its population, China is performing better than India. it is said that India will even overtake China in population in future. Because of its better economic environment China is attracting more money than India from foreign countries towards its industrialization and development of services. Today China’s standard of living has improved so much that its poverty ratio fell from 51 percent in 1981 to 2.5 percent in 2005 while India had 27.5 percent of poor population at that time.

30. Explain any tow rights of consumers.              4

Ans. Two rights of consumers are:

1. Right to safety:- This right provides protection against the marketing of gods that are unsafe to the health and life e.g. adulteration in food, medicines, electronics and so on.

2. Right to be Heard:- This right ensures that consumers’ interest will be given due consideration in the appropriate forums. This right also empowers the Indian consumers to fearlessly voice their complaints against the defective products and the erring producer/company/seller.

31. How is supply of a commodity affected by

(1) Decrease in price of other related goods.

(2) Improvement in technology of production.                                  6

Ans. Supply of a commodity affected by

(1) Decrease in price of other related goods:- Supply of a commodity is also influenced by the price of other related goods. Let us suppose that a farmer produces two goods wheat and rice with the help of given resources. If the price of rice increases, it will be more profitable for the farmer to produce more of rice. The farmer will divert his resources from production of wheat to production f rice. As a result the supply of rice will increase and that of wheat will decrease. On the other hand, a fall in price of rice will result in decrease in supply of rice and an increase in supply of wheat.

 (2) Improvement in technology of production:- An improvement in technology of production reduces the cost of production per unit of the commodity which increase the margin of profit of the firm. This induces the firm to supply more of the commodity with the use of improved technology on the other hand if a firm uses old and inferior technology; it increases the cost of production per unit of the commodity and reduces the margin of profit which leads to decrease in supply of the commodity.

32. Describe any two notable economic features of the Indian economy at the end of British rule.                          6

Ans. At the end of British period two notable economic features were:

1) Decline of Handicraft Industry:- Before the British came to India, Emperors and kings were ruling this land. They promoted the interest of local artisans, carpenters, artists, weavers etc. who were e very good at making beautiful paintings, decorating walls, designing textiles and Jewellery, tailoring, making furniture, toys and idols of stones and metals etc.  These people were using their labour and local skills to create these things. A lot of concentration and long time was required to create such things. But when the British came they defeated the Kings and took over their kingdoms. Towns were destroyed and with this the handicraft industry was also faced closure.

2) Famines and Shortage of Food:- The worst part of British rule in India had been the frequent occurrences of famines. Famine is a situation wherein many people do not get food to eat and die from hunger and diseases. Famine occurred nearly 33 times during whole British period. The most devastating famine was the Bengal famine of 1943, just four years before independence. More than 1.5 million people died at this time due to lack of food.

33. Explain in any three ways the role of primary sector in Indian economy.                       6

Ans. In the primary sector agriculture is the predominance occupation and has the largest share in national income. So let us concentrate on the role and importance of agriculture the Indian economy in terms of its share in the national income, providing employment food and raw materials.

1. Share in National income:- At the time of independence agriculture was contributing more than 50 percent to national income. In recent years its share has come down. In 2009-10 agriculture contributed around 15 percent to national income.

2. Providing employment to largest section of population:- Agriculture is the mainstay of Indian economy. It is the occupation of the largest section of India’s population. At the time of independence about 70 percent of our population depended on agriculture and allied activities to earn their livelihood. With development of manufacturing and service sector dependency on agriculture has slightly reduced. About 50 percent of India’s population was working in agriculture in the year 2009-10.

3. Providing Food to Millions:- Food is the most basic requirement of life. Without agriculture food production and supply would be non-existent. India’s food requirement is not only very high but also increasing every year because of increase in its population. The total food grain production of India in 2008-9 was around 234 million tonnes. This includes wheat, rice and pulses.

34. Give three major causes of soil degradation.                              6

Ans. Three major causes of soil degradation are:

1. Excessive use of chemical fertilizers and pesticides, which causes soil acidification, increases salinity and alkalinity of the soil, reduces organic matter, and increases levels of organic pollutants and toxins and heavy metals (like Cadmium, Lead, etc.)

2. Water logging caused by excessive irrigation and failure to subsequently drain the water from the fields causes an increase in salt content of the soil, making it unfit for growing plants, as well as serves as a breeding ground for mosquitoes.

3. Overgrazing by animals in fields, which reduces plant cover and leaves the soil prone to erosion?


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