Students must start practicing the questions from CBSE Sample Papers for Class 11 Economics with Solutions Set 10 are designed as per the revised syllabus.

## CBSE Sample Papers for Class 11 Economics Set 10 with Solutions

Time Allowed : 3 hours
Maximum Marks : 80

General Instructions:

• All questions are compulsory.
• Marks for questions are indicated against each question.
• Q. No. 1 to 10 and 18 to 27 are Objective Type Questions / Multiple Choice Questions carrying 1 mark each.
• Q. No. 11 to 12 and 28 to 29 are Short Answer Type Questions 1 carrying 3 marks each.
• Q. No. 13 to 15 and 30 to 32 are Short Answer Type Questions II carrying 4 marks each.
• Q. No. 16 to 17 and 33 to 34 are Long Answer Type Questions carrying 6 marks each.

Section – A

Question 1.
Economics is very useful for: [1]
(A) Consumers
(B) Producers
(C) Workers
(D) All of the above
(D) All of the above

Question 2.
Which one of the following is not an essential element of sample: [1]
(A) Representativeness
(C) Dependence
(D) None of the above
Option (C) is correct.

Explanation:
The sample so collected need not be dependent on each other.

Question 3.
When the units of investigation are taken into account, it is called ___________ method. [1]
(A) Sample
(B) Census
(C) Investigation
(D) Transfer
(B) Census

Explanation:
Census investigation or complete count, in which information is collected about every unit of the universe relating to the problem under investigation.

Question 4.
Histogram is represented in the form of ___________ . [1]
(A) Circles
(B) Triangles
(C) Rectangles
(D) Pyramids
(C) Rectangles

Explanation:
A histogram consists of tabular frequencies, shown as adjacent rectangles, erected over discrete intervals (bins), with size equal to the frequency of the observations in the interval.

Question 5.
Read the following Assertion (A) and Reason (R) and choose the correct alternative: [1]
Assertion (A): Ogives can only be made with less than cumulative frequency distribution.
Reason (R): Ogive is a frequency distribution graph by plotting cumulative frequency distribution in a form of smooth curve.
Alternatives:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A)
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
OR
Read the following Assertion (A) and Reason (R) and choose the correct alternative:
Assertion (A): False Base line is that portion of the scale which lies between zero and the smallest value of the variable is omitted.
Reason (R): One important rule in drawing the graph is that the vertical axis must start from zero.
Alternatives:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A)
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
(D) Assertion (A) is false, but Reason (R) is true.

Explanation:
Ogive can also be made with more than cumulative frequency distribution.

OR

(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

Explanation:
They are just the names given but are not explanation why that names are given.

Question 6.
Which out of the following is a positional average? [1]
(A) Arithmetic mean
(B) Median
(C) Geometric Mean
(D) Harmonic Mean
(B) Median

Explanation:
Arithmetic Mean, Geometric Mean and Harmonic Mean are all mathematical average.

Read the following article and answer questions 7 to 10 that follows:

The law of demand is an economic principle that explains the negative correlation between the price of a good or service and its demand. If all other factors remain the same, when the price of a good or service increases, the quantity of demand decreases, and vice versa. When all other things remain constant, there is an inverse relationship, or negative correlation, between price and the demand for goods and services.

For example, suppose all factors remain constant and the price of oil is rising significantly. When the price of oil increases, the price of a plane ticket increases as well. This will cause a fall in the demand for plane tickets, because ticket prices may be too expensive for average consumers.

Suppose an individual wants to travel to a city 500 miles away, and the price of one plane ticket is $500 as opposed to$200 last year. She may be less likely to travel by air due to the increase in price. This causes her quantity demanded for an airplane ticket to decrease to zero. She is more likely to choose a more cost-effective way to travel, such as taking a bus or a train.

Similarly, when the price of a product decreases, the quantity demanded increases. For example, suppose the price of oil significantly decreases instead. This cuts the costs for airline companies and causes a decrease in the prices of airplane tickets. If airline companies are now only charging $100 as opposed to$500 in the previous example, the quantity demanded will increase. An individual may demand five tickets now, as opposed to zero before, because the price of one airplane ticket to travel 500 miles was cut by 80%.
– Why is there a negative correlation between quantity demanded and price? – Investopedia – October 15,2020

Question 7.
Negative correlation shows relation between the two variables. [1]
(A) Direct
(B) Indirect
(C) Inverse
(D) None of the above
(C) Inverse

Explanation:
As in the article Demand and Price are related inversely and thus, have negative correlation.

Question 8.
If the correlation ranges from -1 to – 0.75 what degree of negative correlation will it have? [1]
(A) High
(B) Moderate
(C) Low
(D) No
(A) High

Explanation:
High correlation ranges from -1 to -0.75, Moderate ranges from -0.75 to -0.25, Low ranges from -0.25 to 0.

Question 9.
What type of correlation exists between demand and price as per the above article? [1]
(A) Positive
(B) Negative
(C) Both (A) and (B)
(D) Neither (A) nor (B)
(B) Negative

Question 10.
What does the negative correlation between the demand and price imply? [1]
(A) The consumers search for substitutes
(B) The consumers buy less if prices increase
(C) Both (A) and (B)
(D) Neither (A) nor (B)
(C) Both (A) and (B)

Question 11.
What is the difference between simple index number and weighted index number? [3]
Simple index number is based on the assumption that all the commodities are of equal importance. While constructing index numbers each and every commodity is given weight with its related importance. This is known as Weighted Index Numbers.

Question 12.
Find unknown frequency in the table given below: [3]

 X Frequency (f) 5 5 10 7 15 ? 20 10 25 8 30 6 Σf=50

OR
The monthly per capita expenditure incurred by workers for an industrial centre during 1980 and 2005 on the following items are given below. The weights of these items are 75, 10, 5, 6 and 4 respectively. Prepare a weighted index number for cost of living for 2005 with 1980 as the base.

 Items Price in 1980 Price in 2005 Food 100 200 Clothing 20 25 Fuel & light 15 20 House Rent 30 40 Miscellaneous 35 65

To find unknown frequency subtract the sum of known frequencies from sum of total frequencies.
Σf = 50
Sum of known frequency = 5 + 7 + 10 + 8 + 6 = 36
Unknown frequency = Total frequency – Sum of known frequencies = 50 – 36 = 14

OR

CPI = $$\frac{\sum W R}{\sum W}$$ = $$\frac{18,459.50}{100}$$
= 184.60 (Approximately 184)

Question 13.
What do you understand by Circular or Pie Diagram ?
OR
Present the data given in the table below in a histogram:

 Marks Frequency 0-10 4 10-20 10 20-30 16 30-40 22 40-50 20 50-60 18 60-70 8 70-80 2

Pie diagram represents the total magnitude and its various components and in simple term, we can say, it is a circle that may be divided into various sectors representing the respective components. The circle comprises 360°.
For example, Pie diagram showing amount spent on expenditure:

OR

Question 14.
The annual salaries of four men were ₹5,000, ₹6,000, ₹6,500, ₹3,000 [4]
(i) Find the Arithmetic Mean of their salaries.
(ii) Is this average typical to their salaries?
(i) A.M. = $$\frac{₹ 5,000+₹ 6,000+₹ 6,500+₹ 3,000}{4}$$
∴ X̄ = $$\frac{\sum X}{N}$$ = $$\frac{₹ 20,500}{4}$$ = ₹5,125

(ii) This mean can be said as the representative value of the series since the values of items are neither too high nor too low, therefore, this average is typical of their salaries.

Question 15.
Recast the following cumulative table into the form of an ordinary frequency distribution and determine value of the median. [4]

 Number of Days Absent Number of Students Less than 5 29 Less than 10 224 Less than 15 465 Less than 20 582 Less than 25 634 Less than 30 644 Less than 35 650 Less than 40 653 Less than 45 655

Question 16.
(i) Define Mode and write its three demerits. [3]
(ii) Mode is the best representative value of all items of the series because it is that value which occurs most frequently in the series. State four advantages of Mode in the context of above statement. [3]
(i) Mode: “The value occurring most frequently in series (or group) of items and around which the other items are distributed most densely”.

Demerits of the Mode
(a) Incapable of Algebraic treatment: Unlike mean, mode is not capable of further algebraic treatment.
(b) Uncertain and vague: Mode is an uncertain and vague measure of central tendency.
(c) Restricted use: If the frequency of each item of the series is same than mode cannot be calculated. In this way, the use of mode is restricted.

(ii) Mode is the best representative value of all items of the series because:
(a) It is easy to calculate and can be easily understood. It can be located by inspection only.
(b) It is not affected by the extreme values in a series.
(c) It can be calculated even in case of open-end classes.
(d) Mode helps in describing the qualitative aspects of phenomenon.

Question 17.
Calculate rank correlation between A and C ranks given below: [6]

OR
Calculate the Mean from the following data: [6]

 X No. of Students 0-10 2 10-20 3 20-30 4 30-40 1

OR

Mean(X̄) = A + $$\frac{\sum f d^{\prime}}{N}$$ × i
= 15 + $$\frac{4}{10}$$ × 10
= 15 + 4 = 19

Some students don’t write the correct formula of standard deviation.

Students should practice a lot.

Section – B

Question 18.
Identify the correct pair of terms and definitions from the following Columns I and II

 Column I Column 11 A. Production Function 1. Shows the functional relation between physical inputs and physical output of a good. B. Short Run Production Function 2. All the factors of production are variable. C. Long Run production Function 3. One factor of production is variable and all others are fixed. D. Long Run Production Function 4. Addition to utility

(A) A – 1
(B) B – 2
(C) C – 3
(D) D – 4
OR

 Column I Column II (A) Total Fixed Cost 1. The cost incurred in labour. (B) Total Variable Cost 2. The cost incurred in buying machinery. (C) Total Cost 3. The cost incurred in the selling of items. (D) Average Cost 4. The cost incurred per unit of output produced.

(A) A – 1
(B) B – 2
(C) C – 3
(D) D – 4
(A) A – 1

OR

(D) D – 4

Question 19.
When MU is zero TU is ________ . [1]
Maximum

Question 20.
Read the following Assertion (A) and Reason (R) and choose the correct option: [1]
Assertion (A): MP increases in stage I as per law of variable proportion.
Reason (R): Fuller use of the variable factor.
Alternatives:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
(C) Assertion (A) is true, but Reason (R) is false.

Explanation:
There can never be a fuller use of the variable factor.

Question 21.
There is a sudden change in climatic conditions resulting in hot weather. Assuming no change in the price of cold drinks, it will lead to: [1]
(A) Upward movement along the same market demand curve
(B) Downward movement along the same market demand curve
(C) Rightward shift in market demand curve
(D) Leftward shift in market demand curve
(C) Rightward shift in market demand curve

Explanation:
As the weather has changed and the prices remained the same, so even at the same prices due to the hot weather, the demand for cold drinks will increase leading to the rightward shift in the demand curve.

Question 22.
What happens to AP when MP is more than AP? [1]
(A) AP rises
(B) AP falls
(C) AP remains constant
(D) None of these
(A) AP rises

Question 23.
The expenses incurred in production of a commodity towards payment of services outside the firm are called __________ . [1]
(A) Explicit Cost
(B) Implicit Cost
(C) Opportunity Cost
(D) None of the Above
(A) Explicit Cost

Read the following passage and answer Questions 24 to 27 that follows on the basis of the same:

In a market survey it was found that the price of the commodity does not only affect the demand of the commodity. It was ascertained that even though the negative relationship between price and commodity holds, the other factors play an important role as well. Demand for a commodity is affected by the following factors:
(i) Income of the consumer: Market demand for a commodity is directly related to income of the consumer. Increase in income of consumer causes increase in market demand for the commodity.
(ii) Prices of related goods: In case of substitute goods, demand for a commodity falls with fall in price of the substitute commodity. In case of complementary goods, market demand for the commodity rises with a fall in the price of complementary commodity.
(iii) Tastes and Preferences: If consumer’s tastes and preferences change, quantity demanded of the commodity will also change.
(iv) Income Distribution: when the income of the consumers increases in the market the demand for the commodity increases and the consumers start demanding more or otherwise when the income decreases the demand decreases.

Question 24.
When the price of the commodity rises, the demand of the commodity ___________. [1]
(A) Rises
(B) Falls
(C) Remains the same
(D) Cannot be said.
(B) Falls

Explanation:
As there is a negative relationship between the demand and price of the commodity the price rise will lead to the fall in the demand.

Question 25.
Increase in the ___________ of the consumer, increases the ___________ of the commodity. [1]
(A) Income, Price
(B) Price, Demand
(C) Income, Market Demand
(D) Market Demand, Price
(C) Income, Market Demand

Explanation:
The increase in the income of the consumer leads to an increase in the demand as the purchasing power of the consumers increases in the market and the price of the commodity becomes relatively cheaper.

Question 26.
With change in the taste and preference of the consumers, the market demand ____________ . [1]
(A) Increases
(B) Decreases
(C) Changes accordingly
(D) Remains the same.
(C) Changes accordingly

Explanation:
With change in the taste and preference of the consumers, the demand changes as per the change in the taste and preference. If the consumer prefers another good the demand of the particular good decreases and vice versa.

Question 27.
The demand is not affected by which of the following factors: [1]
(A) Price of the commodity
(B) Income of the consumers
(C) Price of related goods
(D) None of the above
Option (D) is correct.

Explanation:
As all the factors affect the demand of the commodity, thus none of the above is the correct option.

Question 28.
(i) What is Price Line ? [2]
(ii) What is the relation between market price and average revenue of a price taking firm ? [2]
OR
The equilibrium market wage rate is ₹ 14,000 per month. The government finding it low fixes minimum wage rate at ₹ 18,000 per month. Examine the implications of this decision. Use diagram. [4]
(i) Price Line or firm’s demand curve is the same as firm’s AR curve, because AR means price, and demand curve (or AR curve) shows the relationship between price and quantity demanded of firm’s output.

(ii) Market price and average revenue of a price taking firm are equal. Both are indicated by a horizontal straight line, because market price is constant for a price taking firm.

OR

Payment of wage rate (₹ 18,000) higher than equilibrium wage rate (₹ 14,000) leads to excess supply of labour as shown in the diagram, equal to AB. Since supply is greater than demand, it may lead to unemployment equal to AB.

Question 29.
What is maximum price ceiling? Explain its implications. [3]
Price Ceiling or Maximum Price: It refers to fixing of the maximum price of a commodity at a level lower than the equilibrium price. Government imposes price ceiling in case of essential commodities (Wheat, Sugar, Kerosene, etc.) when the equilibrium price determined by free market forces of demand and supply is high.

Implications of price ceiling:
1. Shortage (excess demand): At this controlled price, quantity demanded is more than quantity supplied. It creates a shortage and to overcome this shortage government may enforce the rationing system.

2. Black marketing: If rationing is not administered by the government effectively it results in black marketing. Due to excess demand buyers will compete and they would be willing to buy a commodity at a higher price than the price fixed by the government.

Some students misunderstood the term Price Ceiling and Price floor.

Students must do ample practice for clearing the concept.

Question 30.
A 5 percent fall in the price of a good raises its demand from 300 units to 318 units. Calculate its price elasticity of demand. [4]
Given, percentage change in price = – 5%
Q = 300 units
Q1 = 318 units
ΔQ = Q1 – Q
= 318 – 300 = 18 units
Percentage change in quantity demanded
= $$\frac{18}{300}$$ × 100 = 6 %
Price elasticity of demand (Ed)
= $$\frac{\% \text { Change in Quantity Demanded }}{\% \text { Change in Price }}$$
= $$\frac{6 \%}{(-) 5 \%}$$
= – 1.2

Question 31.
Complete the following table: [4]

Question 32.
(i) Why does an economic problem arise? [2]
(ii) State any two assumptions on which a Production Possibility Curve is based. [2]
OR
Giving reason, comment on the shape of Production Possibility Curve based on the following schedule [3]

 Goods X (Units) Goods Y (Units) 0 8 1 6 2 4 3 2 4 0

(i) The reasons why economic problem arise are:
(a) Wants of people are unlimited: It is due to unending circle of wants. After the satisfaction of one want, another want arises.
(b) Resources are limited: Problem of allocation of resources arises because resources are not enough to satisfy wants of every individual.
(c) Resources have alternative uses: Scarce resources have alternative uses. When an individual chooses to use a given resources for something, he/she is unable to use that resources for anything else.

(ii) PPC is based on the following assumptions:
(a) Only two goods can be produced with the help of given resources.
(b) The resources are fully and efficiently utilised and there is no change in technology.
(c) The amount of resources in an economy is fixed but these resources can be transferred from one use to another.

OR

 Goods X (Units) Goods Y (Units) 0 8 1 6 2 4 3 2 4 0

When we draw the data given in the table, we find that when we increase X by one unit we have to sacrifice 2 units of Y. This shows that where Marginal Opportunity Cost or MRS is constant, PPC will be a straight line curve sloping downwards.

Question 33.
Explain the law of variable proportions with the help of a numerical example. [6]
OR
Explain the effect of the following on market supply of a good:
(i) Increase in input prices
(ii) Reduction in per unit tax. [6]
The law of variable proportions is explained with the help of following Table and Fig.

Increasing MP implying increasing returns to a factor. Diminishing MP implying diminishing returns to a factor [Note: Where MP stops increasing, from that very point it starts diminishing. Thus, overlapping is indicated in the above table when MP = 4.] The table shows that as more and more units of labour are combined with fixed amount of land, MP (marginal product) tends to rise till 3 units of labour are employed. In this situation, TP (total product) increases at the increasing rate. This is a situation of increasing returns to the factor. But, with the application of 4th unit of labour, situation of diminishing returns sets in: MP starts decreasing and TP increases only at the decreasing rate. Diminishing MP reduces to zero when 7th unit of labour is added, and MP becomes negative (-1) when 8th unit of labour is also employed. Total output is maximum (= 15), when marginal output is zero and it starts declining (from 15 to 14) when marginal output = – 1 (negative).

Diagram shows that:
1. MP tends to rise till OL units of labour are used with the constant application of land. This corresponds to point E on the MP curve. This is a situation of increasing returns to a factor.

2. When MP is rising, TP tends to rise at an increasing rate. This occurs till point K on the TP curve. This corresponds to the situation of increasing returns to a factor.

3. Beyond OL units of labour, MP tends to decline and TP increases only at diminishing rate. This occurs between E and S on MP curve and between K and T on TP curve. This corresponds to a situation of diminishing returns to a factor.

4. Beyond OS units of labour, MP becomes negative. Now, TP starts declining. Economics sometimes refers to this situation as a situation of negative returns.

OR

1. Increase in input prices: Change in price of raw material and remuneration of factors, (rent, wages, interest and profit) influences the cost of production of a commodity and thereby its supply. An increase in price of inputs, will increase the cost of production leading to a reduction in profit. This will make the producer reduce the supply of the commodity, shifting the supply curve to the left.

2. Reduction in per unit tax: Government levies taxes on production of goods, etc. Such taxes influence supply because it adds to the cost of production. Reduction in per unit tax levied by the government will decrease the cost of production and increase supply by the firms due to higher profit margins. In this case the supply curve will shift towards the right.

Question 34.
Define consumer’s equilibrium. Explain its condition under indifference curve analysis. [6]
Given income of the consumer and the prices of the goods he buys, the consumer is said to be in equilibrium when he spends income in such a way that he gets maximum satisfaction.
(i) Marginal Rate of Substitution (MRS) = Px / Py
(ii) MRS falls as more is consumed of X.

Explanation:
1. Suppose MRS > Px/Py. It means that consumer is willing to pay more for goods X, than the prevailing market price. Consumer buys more of X and less of Y till MRS = Px/Py again.

2. Unless MRS has a tendency to fall as more is purchased the consumer will never reach equilibrium again.
(Note: Explanation MRS < Px / Py is also correct)