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Class 11 - Economics
Sample Paper - 05 (2023-24)

Solution

Section A
1. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
2. (b) WPI
Explanation: The monthly WPI number shows the average price changes of goods usually expressed in ratios or
percentages. The index is based on the wholesale prices of a few relevant commodities available. The commodities are
chosen based on their significance in the region.
3. (b) All of these
Explanation: The correlation coefficient is a statistical measure of the strength of the relationship between the relative
movements of two variables. The values range between -1.0 and 1.0. A calculated number greater than 1.0 or less than
-1.0 shows that there was an error in the correlation measurement.
4. (c) 69.84
Explanation:
Base Year Current Year
Commodity P1q1 P0q1
Price (P0) Quantity (q0) Price (P1) Quantity (q1)
A 4 2 6 3 18 12
B 3 5 2 1 2 3
C 8 2 4 6 24 48
Total 44 63
Paasche’s price index= 44

63
× 100 = 69.84

p1 q1
(Paasche's price index = p0 q1
× 100

5. (c) The given period

Explanation: Paasche’s Method:
Under this method of calculating Price Index, the quantities of the current year are used as weights as compared to base
year quantities used by Laspeyres.
6. (c) Reciprocal of price index number
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Explanation: Purchasing power of money = 1 / Cost of living index.
Hence,it is a reciprocal of Cost of Living index.
7. (b) All of these
Explanation: Statistics is used by the government as the role of government has increased and requires much greater
information in the form of numerical figures to fulfil the welfare objectives. Statistics is also an indispensable tool for a
proper understanding of various economic problems. Statistics is also useful for Industries as it helps in forecasting,
production planning, quality control etc.
8. (b) The column headings
Explanation: At the top of each column in a table, a column designation is given to explain figures of the column. This

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is called a caption.
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9. (b) price in period t/base period price)(100)
p
Explanation: By definition, we have, price relative = .It implies that we are comparing current year with base year
p
1

which we require. Instead, if we write

p0
price relative = , it implies that we are comparing base year with current year which is quite absurd both logically and
p1

practically.TO express the comparison in percents we multiply it by 100.

10. (b) -1.0
Explanation: -1. 0 shows a perfect negative correlation between the two variables.
11. With the increase in prices, the amount of goods and services which money wages can buy goes on decreasing. Change
in real wages is computed as follows:
Salary in Base Year ×CPI
=
100

For former standard of living, Ashok should get

= 1400 where 400 is his salary in base year and 350 is the Consumer Price Index.
400×350
=
100

When CPI goes up to Rs. 350, his salary should also increase to Rs. 1400, whereas his salary is only Rs. 800.
∴ Amount required for maintaining the same standard of living = 1400 - 800 = Rs. 600.

12. For finding out weighted mean, each item of the series is multiplied by its weights. Here price per book is multiplied by
Number of books sold. Number sold is the weight in this question. Then we have to find ΣXW and divide it by ΣW

Calculation of Weighted Arithmetic Mean

Books Price per Book (X) Number Sold (W) XW

S 20 40 800
P 30 25 750
E 15 12 180
C 25 13 325
Ch 25 10 250
ΣW = 100 ΣXW = 2305

Now, ¯¯¯¯
Xw =
ΣXW

ΣW
=
2305

100
= 23.05

Hence, required weighted arithmetic mean=23.05

OR

In this particular case, Mr. Ram has an annual income of Rs,10,00,000 while Mr. Raj has annual income of
RS.70,00,000. Their average income has been computed at Rs.40,00,000 per annum.
As per the given case, the average income computed is not representative of the actual annual incomes of Mr. Ram and
Mr. Raj. The average income exceeds Mr. Ram’s actual income by Rs.30,00,000 and it falls short of Mr. Raj’s income by
Rs.30,00,000 So, it is not a good representation of their actual annual incomes.
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13. More than cumulative frequency is obtained by finding the cumulate total of frequencies starting from the highest to the
lowest class.
The given table in the form of more than series is shown below:
Item Frequency (f)
More than 10 86 (total)
More than 20 86 - 12 = 74
More than 30 74 - 13 = 61
More than 40 61 - 18 = 43
More than 50 43 - 13 = 30
More than 60 30 - 12 = 18
More than 70 18-9=9
More than 80 9-8=1
14. Percentages are computed as under Year 2013-14
6,65,751
Percentage share of primary sector= 36,47,041
× 100

Net Domestic Product by Industry of Origin in 2013-14 and 2014-15

OR

The above distribution has unequal class intervals. Therefore, the frequencies will be adjusted before constructing the
histogram. For calculating the adjusted frequency, we have to take the width of the lowest class interval, which in this
case is 10.
W idth of the class
Then we calculate the Adjustement factor for any class = W idth of the lowest class
. The given frequency will be divided
by this adjustment factor. The calculations are shown below:
Marks Number of students Adjustment factor Adjusted Frequency
10-20 5 10

10
=1 5

1
=5

20-30 10 10

10
=1 10

1
= 10

30-40 12 10

10
=1 12

1
= 12

40-60 28 20

10
=2 28

2
= 14

60-80 20 20

10
= 2
20

2
= 10

80-110 24 30

10
= 3
24

3
= 8

Histogram-based on above distribution is shown below

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15. The characteristics of a good sample are as follows:

i. A Sample must represent characteristics of the entire universe population i.e., it should be representative.
ii. It must be adequate enough to offer reliable conclusions.
iii. The units of the sample should be independent of each other.
iv. In case more than one sample is selected from a given population, then these samples should be homogeneous.
v. To have a correct picture of the problem under investigation, it is important to draw a sample keeping in view the
objective of the investigation.
16. Calculation of Coefficient of Correlation
X x(X - X ), X = 66.75 x2 Y y(Y - Y ), Y = 67.5 y2 xy
¯¯¯¯ ¯¯¯¯ ¯
¯¯¯ ¯
¯¯¯

65 -1.75 3.0625 67 -0.5 0.25 0.875

66 -0.75 0.5625 56 -11.5 132.25 8.625
57 -9.75 95.0625 65 -2.5 6.25 24.375
67 0.25 0.0625 68 0.5 0.25 0.125
68 1.25 1.5625 72 4.5 20.25 5.625
69 2.25 5.0625 72 4.5 20.25 10.125
70 3.25 10.5625 69 1.5 2.25 4.875
72 5.25 27.5625 71 3.5 12.25 18.375

Σ X = 534 Σ x2 = 143.5 Σ Y = 540 Σ y2 = 194 Σ xy = 73

Here, n = 8, Σ X = 534, Σ x2 = 143.5, Σ Y = 540, Σ y2 = 194, Σ xy = 73

Now, X ¯¯¯¯
=
ΣX

n
=
534

8
= 66.75, and Y ¯
¯¯¯
=
ΣY

n
=
540

8
= 67.5
Σxy 73 73 73
r = = = = = 0.438
√143.5×194 √27839 166.85
√Σ x2 ×Σ y 2

It indicates that there is low degree of positive correlation between height of fathers and sons.
17. Let the missing frequencies be x and y.
Class Interval Frequency (f)
10-20 x
20-30 5
30-40 12
40-50 y
50-60 2
n=30

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Calculation of Missing Frequencies

Sum of frequencies=
Mode = 36 (given)
n = Σf = 30 (given)

As the value of mode is 36, so the modal class

is 30-40.
f −f
1 0
∴ Mode , ( M0 ) = l1 + × c
2f −f −f

12−5
1 0 2
x+5+12+y+2=30
⇒ 36 = 30 + × 10
∴⇒ x+5+12+7+2=30 [∵ y=7]
24−5−y

7
⇒ 6 = × 10
19−y ∵ x=4

⇒ 6(19-y)=70 ⇒114-6y=70
⇒ 6y=44 ⇒y =
44
= 7.33 = 7
6

[as the frequencies cannot be in fractions]

Thus, the two missing frequencies are 4 and 7.

OR

Marks Number of Students (f) Cumulative Frequency (cf)

10 4 4
20 10 14
30 20 34
40 8 42
50 6 48
60 3 51
n = Σf = 51

First quartile and third quartile can be calculated by using the formula given below:
Q1 Q3

n+1
Q1 = Size of ( ) th item
4 n+1
Q3 = Size of 3 ( ) th item
4

51+1 (51+1)
= Size of ( ) th item
4 = Size of 3 th item
4

= Size of 13th item and it lies in cf 14, =Size of 39th items and it lies in cf 42,
Hence Q1= 20 marks Hence Q3= 40 marks

Section B
18. (d) all of these
Explanation: Increase in supply refers to a situation when more is supplied at the existing price of the commodity. It
leads to a forward shift in the supply curve. Increase in supply may occur due to improvement in technology, reduction
in factor prices, a decrease in the price of a competing product etc.
19. (b) Only B
Explanation: opinions
20. (c) Quantity will decrease
Explanation: Due to a fall in income and number of sellers, supply decreases. We can conclude with certainty that the

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equilibrium quantity will decrease.
21. (c) Costs + Profit
Explanation: The revenue of a firm is its sale receipts or money received from the sale of a product.
22. (d) only variable cost
Explanation: Marginal cost is an additional cost and additional cost cannot be fixed cost, it can be a variable cost.
Accordingly, the sum total of marginal cost corresponding to different units of output becomes TVC.
23. (c) A is true but R is false.
Explanation: A is true but R is false.
24. (c) Perfect competition
Explanation: The resources(land, labour, capital and entrepreneurship) are free to move to the industry in which they
get the best price as there is freedom of entry and exit
25. (c) Many close substitutes exist in monopolistic competition
Explanation: In monopoly, there is a single seller and no close substitutes are available for the product. So the customer
cannot shift to any other product(as there are no substitutes) if the monopolist increases the price of the product. In such
a case the demand is less elastic or inelastic. Whereas in monopolistic competition, there are large number of sellers and
substitutes are available, so the customer will shift to substitute product if there is a increase in price. As such in this
situation the demand is more elastic.
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26. (c) increasing
Explanation: MC is the rate of TC. If TC increases at increasing rate, MC must be increasing.
27. (c) True
Explanation: The firm can earn abnormal profits only when TR > TC
28. Problem of 'what to produce' arises as the economy has limited resources. Because of the scarcity of resources, producers
are unable to produce everything in desired quantity, so they have to make a choice as to which product or service is
important as a whole so that limited resources can be rationally managed. There is a problem of allocation of resources
among different goods.
For example, the production of more bread is possible only by reducing the production of other goods.
Problem of 'what to produce' involves two-fold decisions
i. Selection of goods and services to be produced,
ii. Quantity of to be produced of each of the selected goods.

OR

There would not be any problem of choice or the problem of rational management of resources. The problem of choice
then ceases to exist; accordingly there should not be any economic problem and no economics as such.
Example: If farming land could be used only for the production of rice (and no other crop) then where is the problem.
Just grow rice and relax! The problem arises because farming land can be used for the production of different crops, like
rice and Bajra.

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29.

The diagram shows an increase in demand while supply remains unchanged. Equilibrium price rises to OP1, and
equilibrium quantity rises to OQ1.
i. When the income of the consumer rises, the demand curve shifts to the right.
ii. When the number of consumers increases, market demand for the commodity increases. Again, it implies a forward
shift in the demand curve. It will shift towards the right thereby increasing the quantity demanded and price of the
product.
30. It is true to say that a good may be inferior for one consumer and normal for other. Whether a good is considered as
inferior or normal depends upon income of the consumer. Any good is identified as inferior good when income effect is
negative i.e., with increase in income the demand for good falls.
(i) If a poor person's income increases and because of this increases he switches from coarse grains to low quality grains,
then for him low quality grains is a normal good. Whereas for a person in the middle income group low quality grains is
an inferior good.
(ii) Even a normal car can also be an inferior good for some people. A person may be owning a normal car due to his low
income, but when his income increases he will start demanding luxury cars. So, for him normal car is an inferior good
and luxury car is a normal good.
31. Total and Marginal Cost and Revenue Schedule
Total
Output Revenue Profit Marginal
Price Total Marginal
(Q) (TR in (Rs) Revenue
(P) Cost Cost
(units) Rs)
(AR× Q)
1 24 26 24 -2 24 26
2 24 50 48 -2 24 24
3 24 72 72 0 24 22
4 24 92 96 4 24 20
5 24 115 120 5 24 23
6 24 139 144 5 24 24
7 24 165 168 3 24 26

Reason :
At 2nd and 6th unit, MR=MC. But at 7th unit MC>MR. Thus, by this both the condition of producer equilibrium is
satisfied.

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OR

In order to get maximum profit under perfect competition, a firm must compare its marginal cost with marginal revenue.
According to marginal analysis, a firm would, therefore, be in equilibrium when the following two conditions are
fulfilled :
i. MC = MR.
ii. The MC curve cuts the MR curve from below.

In this figure, MC cuts MR at two points A and ‘E’. Point ‘A’ cannot indicate the position of equilibrium of the firm as
at point A Marginal cost of the firm is still falling or we can say MC is not cutting MR from below.

Here point ‘E’ represents the equilibrium of the firm. At this point, both the conditions of equilibrium are being fulfilled:
Marginal cost is equal to marginal revenue (MC = MR) and the marginal cost curve is cutting the marginal revenue curve
from below. At point ‘E’, the firm gets a maximum profit. In case, the firm produces more or less than OM output, then
its profits will be less than the maximum.
32. Marginal Rate of Substitution (MRS) refers to the rate at which the consumer is willing to sacrifice one good to obtain
one more unit of the other good. Symbolically,
Quantity of the Good Sacrificed (Y)
MRSxy =
Quantity of the Good Obtained (X)

Indifference Curve (IC) is convex to origin due to diminishing Marginal Rate of Substitution. It means that a consumer is
willing to sacrifice less and less units of a good to gain an additional unit of the other good because the utility that he
gets from consuming an additional unit of a good goes on diminishing. As the consumer substitutes commodity X for
commodity Y, the marginal rate of substitution diminishes as X for Y along an indifference curve. Thus indifference
curve is steeper towards the Y axis and gradual towards the X axis. It is convex to the origin.
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33. The behavior of Marginal Product in the law of variable proportion is as under:
i. When total product increases at an increasing rate (convex shape) (till point P), MP also increases.(till the point P
1

ii. when total product increases at a diminishing rate (concave shape) (till point A)., then Marginal product falls and
remains positive (Till point B1),
iii. when total product is at its maximum and constant (At point B), Marginal Product is zero (at point B1),

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iv. when total product falls (after point B), Marginal product becomes negative (after point B1)

Causes or Reasons of this Behaviour is as Under:

i. Phase I
a. Proper utilization of the fixed factor
In the initial stage of production the supply of the fixed factory, eg. land is too large whereas the supply of
variable factors are too few. So, the fixed factor is not fully utilised.
Proper utilization of the fixed factor is attained when more and more units of variable factor (labour units)
are applied to the fixed factor (land). So, in this phase, when more and more variable factor, i.e. labour is
used, the production increases at an increasing rate.
b. Specialization and division of labour
Suppose, initially there was only one labour working on all the 5 acres of land doing all the jobs of
ploughing, watering, etc.
As the number of labour units increases, each worker specializes in a particular activity and this leads to
specialization of the variable units which in turn leads to increased efficiency.
ii. Phase II
a. The non-optimal combination of variable factor with the fixed factor
There is a optimum combination of variable factors and fixed factors and this point productivity is at it
maximum and all the fixed factors are effectively utilised. After this optimum combination, the marginal
returns of the variable factors starts diminising, i.e. TP increases but at a diminishing rate.and MP starts
falling but remains positive. In other words, as many workers share the same fixed factor, the share of each
worker would obviously fall. Therefore, the cooperation of the fixed factor is not available to the same
extent. Thus, an increase in the variable factor would add less and less to total output.
b. Imperfect Substitutes
Diminishing return to factor occurs because variable factor and fixed factor are imperfect substitutes to
each other.
Technically speaking, there is a limit to which variable factor can be substituted for fixed factor and that
limit depends upon the efficiency of fixed factor. But beyond the optimum limit they become imperfect
substitutes to each other which leads to diminishing returns.
iii. Phase III
a. Efficiency of Variable Factor Fall

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In this stage the amount of variable factor becomes excessive relative to the fixed factor. This happens
when too many labour are engaged in cultivating on a given piece of land.
Instead of helping each other in production they cause overcrowding and chaos and thus hamper each
other’s work. With continous increase in variable factor, the advantages of specialization and division of
labour starts diminishing. In such a case, the contribution of additional labour to production is bound to be
negative.
Thus, the marginal returns become negative and the total returns start diminishing.
b. Efficiency of Fixed Factor Fall
Too much of a variable factor may also lead to the inefficiency of the fixed factor as well.
In case of capital, which is a fixed factor, too much of labour may cause lot of wear and tear of machinery,
frequent breakdowns and excessive cost of maintenance. This is bound to affect total production adversely.
In such a situation it is advisable to reduce the units of the variable factor than to increase it with a view
for getting maximum production.
34. Answer the following questions
1. Price elasticity of demand is a measure showing percentage change in quantity demanded with respect to some
percentage change in the own price of the commodity.
ΔQ
Price elasticity of demand (Ed) = (−)
P

Q
×
ΔP

Here, ΔQ = Change in quantity demanded; ΔP = Change in price; Q = Initial quantity; P = Initial price.
2. i. Number of substitutes of goods: Demand for goods which have close substitutes (like tea and coffee) is
relatively more elastic, because when the price of such a good rise, the consumers have the option of shifting to
its substitute. Goods without close substitutes like cigarettes etc are generally found to be less elastic or inelastic
in demand. Thus, the availability of close substitutes makes demand sensitive to change in prices.
ii. Nature of the commodity: Ordinarily, necessaries like salt, matchboxes, medicines etc have inelastic demand as
it is required for human survival and its demand does not fluctuate much with a change in price. Luxuries, like air
conditioner, costly furniture, car etc have more elastic demand as compared to the demand for comforts. Comforts
like, cooler, fans etc have an elastic demand as consumers can postpone their consumption.

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