NIOS Economics 214 Solved Paper’ October 2016, NIOS Secondary Solved Papers

NIOS Economics 214 Solved Paper’ October 2016

NIOS Secondary Solved Papers

1. Which one of the following is a non economic want?

(A) Air.

(B) Mobile phone.

(C) Television.

(D) Car.

2. Which one out of the following is not a feature of a capitalist economy?

(A) Profit Motive.                           

(B) Absence of government interference.

(C) Collective ownership of means of production.

(D) Freedom of Enterprise.

3. An economic system which combines government planning with the free market economy, is called:

(A) Capitalism. 

(B) Socialism.

(C) Mixed Economic System.

(D) None of the above.

4. Kendriya Bhandar is a production unit in the form of:

(A) Corporation                .

(B) Private Non-Profit Organization.

(C) Co-Operative Society.

(D) Partnership.

5. Output per unit of a variable input is:

(A) Marginal Product.

(B) Average Product.

(C) Total Product.

(D) None of the above.

6. Needle and thread are examples of:

(A) Complementary goods.

(B) Substitute goods.

(C) Inferior goods.          

(D) Unrelated goods.

7. Which one of the following is a variable?

(A) Intelligence level of a boy.

(B) Bravery.

(C) Beauty of a girl.

(D) Height of students.

8. Which one of the following is a non-renewable resource?

(A) Trees in the forest.

(B) Fish in the ocean.

(C) Coal in the coal-field.

(D) None of the above.

9. Mention two examples of your economic wants in daily life and justify why they are economic wants.                  2

Ans. Bread and Milk are two examples of our economic wants in daily life and these are called economic wants because for these wants we have to pay certain amount of money.

10. Define an economy. What are the two basis on which it is differentiated?                   2

Ans. According to A.J.Brown, ‘’ An economy is a system by which people get living”.

Two basis on which it is differentiated are:

Developed economy and Developing economy

11. Distinguish between labour-intensive technology and capital-intensive technology.         2

Ans. When we make more use of labour and less use of capital per unit of output in the production of our commodity that is called labour intensive technology. Whereas, when we make more use of capital and less use of labour per unit output in the production of our commodity that is called capital intensive technology of production.

12. If for producing 50 units of a commodity, a total cost of Rs. 1,000 was incurred, out of this, total fixed cost was Rs. 400. Calculate its total variable cost and average cost.

Ans. Total Variable cost = Total cost – total fixed cost

                                                = 1000 – 400

                                                = 600

Average cost = Total cost/total output

= 1000/50

                         = 20

13. Define the law of demand with the help of an hypothetical schedule.                    2

Ans. The law of demand describes the relationship between the quantity demanded and the price of a product. It states that the demand for a product decreases with increase in its price and vice versa, while other factors are at constant.

14. On the basis of the following schedule what happens in the given market, when

 (1) the given price is Rs. 10 (2) the given price is Rs. 7.


Quantity demanded


Quantity supplied








 15. Explain the ‘medium of exchange’ function of money.                           2

Ans. Money as ‘a medium of exchange ‘

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

16. Why a simple bar diagram is called one-dimensional diagram’? Explain

Ans.  A diagram in which the size of only one dimension i.e. length is fixed in proportion to the value of the data is called one dimensional diagram. Such diagrams are also popularly called bar diagrams. These diagrams can be drawn in both vertical and horizontal manner.

17. What are the effects of water pollution?                      2

Ans. Effects of water pollution:- A number of waterborne diseases such as cholera, typhoid, diarrhea etc. are produced by the pathogens present in polluted water, affecting human beings and animals alike. Water pollution affects the chemistry of water.

18. How can you contribute to sustainable development by “Recycling’’? Give examples from our daily life.                   2

Ans. Recycling- to use again, to re-process. To make paper we need wood pulp which comes from trees. Therefore by recycling used paper we can contribute to saving trees from being cut down. Water is a scarce resource yet we do not use water judiciously. We can reuse rainwater by rainwater harvesting.

19. Explain how do wants arise and grow.            4

Ans. Wants are a part of our living. They arise with the birth of man. Man in ancient times was satisfied while living in forests, drinking water from the streams, plucking fruits from trees or eating animal fest to satisfy hunger. He had limited wants which were related to food, shelter and clothing. Over a period of time, these wants have grown. How did it happen?

With the discovery of fire man started cooking food. This led to the discovery of new food items. Man’s taste grew and expanded. A large variety of food stuffs came into existence. Today we can find different varieties of tastes, colours and shapes in food items.

As regards clothing, man has moved from unstiched animal skins and tree leaves to a variety of clothes. In order to live better, man discovered and invented new items of clothing. As knowledge, taste and fashion are increasing, new and better products in clothing are emerging.



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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. Explain the Law of Diminishing Marginal Product.                    4

Ans. Law of diminishing Marginal Product of labour

Units of labour (L)

















































 With increase in the units of labour from 1 onwards and by one unit at each stage the value of MP increases for first 3 units of labour i.e. from 10 at L=1 to 12 at L=2 to 14 at L=3. Then the value of MP decreases for next 4 units of labour i.e. from 14 at L=3 to 8 at L=4 to 6 at L=5 to 4 at L=6 at L=7 to 0 at L=8. Finally value of MP becomes negative at L=9. In other words after increasing g temporarily for some time the marginal product of labour eventually decreases. In general way, we can say that with continuous increase in the variable factor labour, its marginal product will increase initially till certain point is reached, but after that it will decrease and may become negative, keeping all other factors unchanged. This is popularly known as the Law of diminishing Marginal Product of labour.

22. Give the meaning of normal goods and inferior goods. Give relevant examples.               4

Ans. Normal goods are those goods whose demand decreases with the decrease in income. So, the demand for normal goods in directly related to the income of the buyer. Whole wheat, organic pasta noodles are an example of a normal good. As income increases, the demand for these noodles increases

Inferior goods are goods whose demand decreases when consumer income rises or demand increases when consumer income decreases. Cheaper cars are examples of the inferior goods. Consumers will generally prefer cheaper cars when their income is constricted. As a consumer’s income increases, the demand of the cheap cars will decrease, while demand of costly cars will increase, so cheap cars are inferior goods.

23. Explain any two major demerits of the barter system which led to the need for money.         4

Ans. Two major demerits of the barter system which led to the need for money:-

a) Double coincidence of wants:- A common problem with the barter system is the lack of double coincidence of wants. Double coincidence of wants mean that if one wants to exchange some good with another person then latter must also be willing to exchange his good with the first person. Take for example, a person wants cloth and he has rice with him to offer i return. Then he can exchange rice for cloth with another person who has cloth and who also wants rice. In practical life, such situation may or may not arise. If the person who has cloth does not want rice, then exchange of rice for cloth will never take place and both the individual cannot satisfy their wants.

b) Lack of division of goods:-  Certain goods are not physically divisible into small pieces. Suppose, a person possesses a cow and he wants items, such as cloth, food grains etc. Then how much of cow can be traded for cloth, how much of cow can be traded for food grains? It was very difficult to determine because, a cow cannot be divided into several pieces.

Due to above problems, the barter system could not continue for long. A human civilization progressed people realized that there has to be some common medium of exchange which can be easily carried, stored, and used to express value of a good. So money came into being.

24. Suppose, you have purchased an auto-rickshaw, which insurance policy will you take? Explain the process involved in the insurance policy taken by your.                         4

Ans. I have to take Auto insurance

Who have scooters, bikes, cars etc. can buy auto insurance form a concerned insurance company. Since automobile is a durable good and has a long life span, say 10 to 15 years, the insurance policy is made in the following way.

a) In the first year, the auto is new. So the insurance company charges higher money as premium from the insured person.

b) In subsequent years, the vehicle becomes old and its value falls gradually. So the company will charge less premium form the insured person.

c) Whenever there is any damage caused to the automobile, the company gives the claim calculated on the basis of terms and conditions mentioned in the insurance policy.

25. Define secondary data and mention any two sources of published data.                       4

Ans. When we use the data, which have already been collected by others, the data are called secondary data. This data is said to be primary for the agency which collects it first, and it becomes secondary for all the other users.

Two sources of published data are:

(1) Published reports of newspapers, RBI and periodicals.

(2) Publication from trade associations.

26. Explain how statistics are always quantitative in nature and are affected by multiplicity of causes.                  4

Ans. Statistics are always quantitative in nature and are affected by multiplicity of causes

Quantitative in nature:- Statistics or data are always quantitative in nature. Qualitative information such as good, bad, average, handsome, ugly are examples of some attributes, the magnitude of which cannot be quantified and as such these cannot be called statistics or data. When facts are put into a framework of numbers wither through counting and calculation or estimation, these may be called data.

Multiplicity of causes:- Data are not influenced by a single factor but are influenced by many factors. For example, rise in price of commodities may have been due to several causes like, reduction in supply, increase in demand, rise in taxes, rise in wages etc.

 27. Arrange the marks obtained by 25 students in a continuous series taking 10 as the class interval. (use exclusive method):

                5              25           80           20           40

                9              12           55            7              70

                15            2             60           75           48

                0            30           45            79           44

                10           8             50           65           76


Class interval

No. of students

















 28. Explain the two reasons for the slow growth of per capita income in India.               4

Ans. India’s per capita income is not only low but also growing very slowly. Reasons for the slow growth of per capita income in India are:-

First, our wants are increasing, as we grow over time. In order to satisfy the extra wants, we need more income. Take for example our won case. Don’t we want to watch a movie in a cinema hall; don’t we want to wear nice dresses; don’t we want to eat in a hotel; don’t we want to watch IPL cricket match in a stadium etc. The list could go endless. But these things are not available free of cost. So we need more income than before to satisfy these wants.  

Second, another reason for earning more income is that the prices of goods we buy in the market are also increasing. So we may have to pay more money for the same goods and services we consume. Recently the prices of petrol and diesel were increased. In Delhi the price was increased by around Rs 5 per litre. Suppose a person runs truck from Delhi to Shima carrying shoes. He sells shoes in Shimla market at the rate of Rs. 300 per pair. His expenditure on diesel before the rise in price was around is Rs. 3100 per trip. Since we spend on other goods as well and prices of others goods are also increasing in a similar fashion. Our income must increase even faster.

29. On the basis of the various Five Year Plans launched by the Government of India, what in your opinion led to the introduction of Annual Plans from 1966-69,1979-80 and 1990-92. Give reason.`  4

Ans. India has adopted five year plans so that tat the beginning of the particular plan it declares as to which problems should be taken up in the coming five years and at the end of the term review the whole situation and the progress made in that direction. We have completed eleventh plan in 2012. We know that the during the period 1966-1969 there was no five year plan but merely annual plans. This was because of lack of monetary and other resources to run a five year plan. Why did this happen? It happened because India fought wars against China in 1962 and against Pakistan in 1965 for which the government had to divert its resources to fight these wars. India also faced drought situation which decreased our agricultural production in this period. So it was difficult to go for a five year plan and India had to manage with annual plans. When the situation got better it restarted five year plan in 1969 with the fourth plan.

In 1979 there was change of government in the centre. So the sixth plan was started in 1980 and the period 1979-80 was converted to annual plan.

30. Explain the role of various agencies around the world in stopping the harmful effects of resource depletion and other environmental problems.                             4

Ans. To stop the harmful effects of resource depletion and other environmental problems, we need to carefully monitor resources usage and check the environmental f\effects of resource depletion. Many agencies around the world like UNEP (United Nations Environment Programme), EPA (Environment Protection Agency), IPCC (Intergovernmental Panel on Climate Change) and in India the MEF (Ministry of Environment and Forests) along with many NGOs worldwide actively advocate the protection of the environment throughout the world and implement acts and laws to protect the environment and prevent the overexploitation of resources.

31. Explain the factors responsible for the upward slope of the supply curve.                    6

Ans. The following factors are responsible for upward slope of the supply curve:

1) A rise in price of the commodity causes rise in profits, as a result firms are induced to supply more quantity of the commodity to increase profit.

2) A rise in price of the commodity induces the seller to dispose of at least a part of his stock. The reverse happens when there is a fall in price of the commodity.

3) An increase in the price of the commodity causing higher profit attracts the new firms to enter the market and this adds to the supply of the commodity leading to more quantity supplied at a higher price.

32. Describe any two factors that have led the service sector to contribute the maximum to the national income of India.                        6

Ans. Role and importance of service sector in the Indian Economy are:-

1. Contribution to National Income:- Among all the three sectors i.e. agriculture, industry and service, it is the service sector that has contributed maximum to the national income of India. If India’s income is 100 then service sector contributed 55.20 in the year 2009-10 which is more than half of the total.

2. Attracting Funds from Foreign Countries:-  Looking at the growth of service sector of India people from foreign countries are showing more interest to invest money in this sector to earn profit. Banking, insurance, trade , transport, hotel services combined have attracted more than 1 lac 18 thousand crores rupees from foreign countries in the form of direct investment. Recently computer service has grown many fold in India. This has attracted more than forty seven thousand crores of rupees from foreign countries. If investments are made then more job opportunities are created. This is advantageous for the nation.

33. Explain the role played by the government in controlling prices of various commodities in the market.                 6

Ans. In order to protect the interest of consumers government fixes the maximum price of the commodity. This maximum price is generally lower than the equilibrium price. This is called control price or ceiling price. This price is fixed by the government because poor people cannot afford to buy the commodity at equilibrium price. This situation arises when the production of a commodity is less than its demand. At the price of the commodity fixed by the government is less than the equilibrium price, it may create excess demand of the commodity which means the buyers are willing to buy more than what the sellers are willing to sell. In India government has a control price or ceiling price of the commodities which it considers essential for the masses. For examples some goods such as wheat, rice, sugar, kerosene oil etc. have a control price. Due to excess demand of the commodity a ceiling price the problem of black marketing may also arise.

34. How do the NGO’s help the aggrieved party in case of seller giving a cold shoulder to it?        6

Ans. In case the producer/company/seller gives the aggrieved party a cold shoulder then the role of non governmental organisations i.e. NGOs becomes every important. One can lodge complaints with some NGO’s like Consumer Grievance (, Consumer Guidance Society of India (www.cgs_india .org), Common Cause ( and Consumer Forum ( NGOs not only help in filing a case but also they provide logistic, manpower and other supports. NGOs also conduct various programmes to educate consumers about their rights and responsibilities. One can also approach consumer help organisation called Jago Grahak Jago. Almost every newspaper provides complete information about it through advertisement. The online grievance form can be had by visiting the site.


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