CBSE Sample Papers For Class 11 Economics Mock Paper 1

Q1. Select the false statement.

a. Statistics can also study individual data.

b. Statistics is of no use to economics without data.

c. Beauty is outside the purview of statistics.

d. Statistics is used in finding relationships between different economic factors.

Ans: a. Statistics can also study individual data.

Explanation: According to Prof. Horace Secrist, “Statistics deals with aggregates of facts, due to which the study of an individual fact lies outside the scope of statistics.” Where knowledge about an individual case is essential, statistics prove inadequate, unless they are an aggregate of facts relating to any particular field of inquiry. Thus, statistical methods do not give any recognition to an object, a person, or an event in isolation.

Q2. With every increase in the size of the sample, the sampling error usually __________.

a. increases

b. decreases

c. remains the same

d. become more complicated

Ans: b. decreases

Explanation: Sampling errors can be reduced by removing bias from the sample and by increasing the size of the sample. With every increase in the size of the sample, the sampling error usually decreases.

Q3. The collected data are organised chronologically under _______.

a. geographical classification

b. quantitative classification

c. qualitative classification

d. chronological classification

Ans: d. chronological classification

Explanation: The collected data are grouped with reference to time, such as years, months, weeks, etc., and are normally classified in ascending order.

Q4. Which diagram is typically used to show data that is organised as a frequency distribution?

a. A bar graph.

b. Pie diagram

c. Frequency diagrams

d. Histogram.

Ans: d. Histogram.

Explanation: Histograms are more suitable to show data that is organised as a frequency distribution.

Q5. The sum of the deviations of the values from actual mean is always equal to ______.

a. zero.

b. one.

c. two.

d. three.

Ans: a. zero.

Explanation: The arithmetic mean has some important mathematical properties, like that the sum of the squares of the deviations of the items from their arithmetic mean is the minimum.

Q6. The median can be located graphically with the help of _______.

a. A bar graph.

b. Ogives.

c. Frequency polygon

d. Pie-diagram.

Ans: b. Ogives.

Explanation: The median can be found with the help of ogive curves, i.e., less than and more than curves.

Q7. With mean = 25, median = 26, value of mode equals

a. 24.

b. 28.

c. 30.

d. 32.

Ans: b. 28.

Explanation: If we know the values of Mean and Median, Mode can be derived with the help of the formula,(Where, M_O = Mode, M_e =median,

M_O = 3M_e – 2X̅

= 3 x 26 – 2 x 25

= 78 – 50 = 28

Q8. The relative importance of different items in the series is taken into account in the case of:

a. Simple arithmetic means

b. Geometric average

c. Weighted arithmetic mean

d. Mode

OR

The square root of arithmetic average of the squares of the deviations measured from mean is called

a. mean deviation.

b. standard deviation.

c. arithmetic range.

d. inter-quartile range.

Ans: c. Weighted arithmetic mean

Explanation: The term “weight” signifies the relative importance of different items.

OR

b.standard deviation.

Explanation: Standard deviation is calculated as the square root of arithmetic average of the squares of the deviations measured from mean. It is useful in judging the representatives of the mean.

Q9. A scatter diagram, displaying points clustered around a downward sloping straight line denotes that X and Y has

a. positive correlation.

b. negative correlation.

c. zero correlation.

d. perfect positive correlation.

Ans: b. negative correlation

Explanation: A scatter diagram is a simple visual method for getting an idea of the correlation between two variables. The scatter diagram displaying points clustered around a downward-sloping straight line denotes that the correlation between X and Y is negative.

Q10. Which year’s quantities are used as weight under Paasche’s index method?

a. base year’s quantities

b. current year’s quantities

c. previous year’s quantities

d. next year’s expected quantities

Ans:

b. current year’s quantities

Explanation: In an index number, the value given to the base year is 100. Paasche’s index method uses the current year’s quantities as weight.

Q11. Distinguish between classification and tabulation?

Ans:

Q12. What is quota sampling?

OR

What do you mean by a pilot survey?

Ans: A quota sample is different from a random sample. It is used for surveys of political, religious, and social opinions. The population is classified into various groups on the basis of income, sex, or religion. The quotas are fixed for each group, and the investigator chooses the units from each group at his discretion.

OR

In case the survey is going to be on a very large scale. It is useful to conduct a survey on a smaller scale, which is called a “pilot survey.”

a. The pilot survey will help to pre-test the suitability of questions to be included in the questionnaire.

b. To avoid any unforeseen problems that may arise during the large-scale survey,

c. To assess the performance of the enumerators and remove any difficulties they may be facing.

Q13. What considerations should be kept in mind while using statistical data? ​

Ans:

The quality of the data plays an important part in statistical analyses. Fallacies may arise if we are using data that is insufficient, unrepresentative, or incomparable.

If we want to estimate the average income of people living in a town and base our estimate on the income of people living in the rich areas of the town, we will get an overestimate.

Any ambiguity in data collection definitions and concepts may lead to incorrect conclusions.If we are collecting figures on income, then we should know exactly how we intend to calculate it. A wage or salary earner may easily give an answer, but a businessman’s income differs from month to month. We should decide how we will calculate his income.

Lastly, statistical methods should be used with a lot of common sense.

Q14. (c) Construct the index number for the following data using

(i) Simple Aggregative Method

(ii) Price relative method.

Ans:

Simple Aggregative Method

P₀₁ = (∑P₁/∑P₀) ×100 = (234/114) ×100 = 2.0526 ×100 = 205.26

P₀₁ = ∑(P1/P0)*100/]N = 1100/5 = 220

Q15. What are the disadvantages of mailing questionnaires?

OR

Define “base year” in the context of economics. What factors are to be considered while selecting a base year?

Ans:

​​The method of mailing questionnaires to the respondents is more convenient and cheaper than a direct interview. But it has many disadvantages. Here are a few examples:

1. The respondent may not understand or misinterpret some questions.
2. The respondent may not take enough care to answer all questions correctly.
3. The respondents’ questionnaires may be ignored. and may not return the questionnaires at all.
4. Some of the questionnaires may be lost in the mail.

OR

While constructing the price index, we have to select two years, i.e., the base year and the year of comparison. The base year is the period against which comparisons are to be made. The selection of the base year is very important.

The following points need to be considered while selecting the base year:i) The base year should be a normal one. The year selected as the base year should be free from abnormal conditions like war, droughts, famines, earthquakes, booms, depressions, etc.ii) It should not be too far off from the current year.

While selecting the base year, a choice has to be made between a fixed base and a chain base. In the fixed base method, we take a particular year as the base year and express changes in items on the basis of this year. Whereas in the chain-based method, the base year keeps changing. For every successive year, the preceding year is taken as the base year.

Q16. Discuss the degrees of correlation.​

Ans: The relationship between two values can be determined by the quantitative value of coefficient of correlation. The degree of correlation can be studied under following heads which are as follows:

1. Perfect correlation – When changes in two related variables are exactly proportional it will be called perfect correlation. If equal proportional changes are in the same direction, this is called perfect positive correlation and the value is described as +1. And if equal proportional changes are in the reverse direction, this is called perfect negative correlation and described as -1.
2. Zero correlation – The value of the coefficient of correlation may be zero. It means that there is zero or no correlation.
3. Limited degree correlation – In social science, the variables may be correlated, but an increase in one variable need not always be accompanied by a corresponding or equal increase or decrease in the other variable. Correlation is said to be limited positive when there are unequal changes in the two variables in the same direction; and correlation is limited negative when there are unequal changes in the reverse direction.

Degrees of Correlation

Q17. What do you understand by the term central tendency? Explain its significance in statistical work.

OR

How is “arithmetic mean” defined? Mention the merits and demerits of the arithmetic mean.

Ans: A “central tendency” is a single figure that represents the whole mass of data. It is an average. It is the figure around which the values of a variable tend to cluster and concentrate. In other words, a measure of central tendency is the value of a distribution that is considered the most representative value for a series.

The following points highlight the significance of central tendency in statistical work:

1. To represent the whole group, average gives a single figure that describes the characteristics of the entire group so that one can get a quick understanding of the general size of the individuals in the group.
2. To facilitate comparison, an average helps in comparing one set of data with the other. For example, the performance of the students of two different schools can be compared by knowing their average results.
3. To facilitate further statistical analysis, various tools of statistical analysis like dispersion, skewness, correlation, etc. are based on averages.
4. To help in decision-making, averages are used in our daily lives. Averages help in making decisions and in planning in various areas. A businessman may like to know the normal output of a plant, sales level, etc. All this refers to the average.

OR

Arithmetic mean or mean: The sum of the values of a group of items divided by the number of items is defined as the arithmetic mean or mean. The arithmetic mean may be of two types: Weighted arithmetic mean (b) and simple arithmetic mean (a).

Merits: The arithmetic mean is widely used because of the following merits:

i) It is easy to calculate and simple to understand.

(ii) It is based on all observations.

(iii) It can be determined even when only the numbers of values and their total are known.

(iv) It is capable of further algebraic treatment.

(v) It serves as a solid foundation for comparing two or more series.

(vi) It is a calculated value and is not based on the position in the series like median and mode.

Demerits: Following are the main drawbacks of the arithmetic mean:

(i) It is heavily influenced by extreme values.

(ii) It cannot be determined in open-ended classes.

(iii) Sometimes the arithmetic mean gives absurd and ridiculous results.

(iv) It cannot be determined graphically.

(v) It provides no insight into the series’ composition.

(vi) It cannot be a true representative of the series since it is not one of the actual items. It does not exist in the series at all.

Q18. If good X and good Y are represented on the x- and y-axes, then the rotation on the x-axis results from

a. Change in the technology of good-X

b. Improvements in good-Y technology

c. Changes in manufacturing technology for both goods

d. Change in resources for production of both goods

Ans:

​a. Change in the technology of good-X

Explanation: When the production technology of good X changes, it results in rotation on the x-axis, while when the production technology of good Y changes, it results in rotation on the y-axis.

Q19. There are two statements marked assertion (A) and reason (R). Read the statements and choose the correct option:

Assertion (A): PPC is concave to the origin.

Reason (R): There exists an inverse relationship between the production of both goods. A good needs to be sacrificed to produce more of another good.

a. Both A and R are true, and R is the correct explanation of A.

b. Both A and R are true, but R is not the correct explanation of A.

c. A is correct, but R is wrong.

d. A is wrong, but R is correct.

OR

An economy in which all resources are owned by private individuals and prices are determined by market forces is called

a. Capitalist economy

b. Socialist economy

c. Mixed economy

d. None of these

Ans: b. Both A and R are true, but R is not the correct explanation of A.

Explanation: A PPC is concave to the origin due to an increasing marginal opportunity cost.

OR

a.Capitalist economy

Explanation: A capitalist economy is a form of economy in which all production activity is done by private individuals. All production activities are carried out to earn maximum profit.

Q20. What change in PPC indicates growth in resources?

a. an inward shift of the production possibility curve.

b. a movement down the production possibility curve.

c. a shift in the production possibility curve to the outside.

d. a movement up the production possibility curve.

OR

The slope of PPC depends on

a. opportunity cost

b. average cost.

c. variable cost.

d. fixed cost.

Ans: c. a shift in the production possibility curve to the outside.

Explanation: Economic growth or the growth of resources is indicated by an outward shift of the production possibility curve. This shows that more products can be produced with the increased resources. This shows an increase in the production possibilities in the economy.

OR

a. opportunity cost

Explanation: PPC’s nature and shape are determined by marginal opportunity cost. The opportunity cost is the cost of passing up the best alternative.

Q21. Individual economic units’ behaviour is studied under _____.

a. macroeconomics

b. microeconomics

c. partial equilibrium

d. general equilibrium

Ans: b. microeconomics.

Explanation: Microeconomics is the branch of economics that deals with the behaviour of small groups of individuals like consumers, firms, industries, and markets.

Q22. What does monotonic preference refer to?

a. Consumer preference to get more satisfaction

b. marginal rate of substitution

c. At least more of one good and no less of another good

d. The consumer’s preference to be indifferent between two goods

Ans: c. At least more of one good and no less of another good

Explanation: The preference of a consumer for a combination that has at least more of one good and no less of another good is called monotonic preference.

Q23. If MU_X/P_X > MU_Y/P_Y, then the consumer will:

a. Consume more of X and less of Y

b. Consume more of Y and less of X

c. Consume more of X and more of Y

d. No change in consumption

Ans: a. Consume more of X and less of Y

Explanation: If MU_X/P_X > MU_Y/P_Y, then it means the consumer is getting more marginal utility from one unit of money from good-X than good-Y. So, the consumer will increase his consumption of good-X and reduce consumption of good-Y till consumer hits the equilibrium.

Q24. The area under the marginal utility curve is equal to _____.

a. Total utility

b. Average utility

c. Total consumption

d. Additional utility

Ans: a. Total utility

Explanation: The sum of marginal utilities from the given no. of units is equal to total utility or total satisfaction.

Q25. The income effect for an inferior good is ________.

a. negative

b. positive

c. ambiguous

d. no effect

OR

The amount of good 2 that the consumer is willing to give up for an extra unit of good 1 is called the _______.

a. diminishing rate of substitution

b. marginal rate of substitution

c. indifference.

d. rate of substitution

Ans: a. negative.

Explanation: Inferior goods have a positive price effect and a negative income effect. Demand falls as income increases, but as prices increase, demand also increases.

OR

b. marginal rate of substitution

Explanation: Marginal rate of substitution measures the consumer’s willingness to pay for good 1 in terms of good 2.

Q26. The indifference curve’s monotonic preference implies that the indifference curve is

a. convex.

b. concave.

c. straight.

d. downward sloping.

Ans:

d. downward sloping

Explanation: Since consumers prefer more goods, to keep utility constant along an indifference curve, consumption of one good has to be reduced. Thus, monotonic preference implies that indifference curves are sloping downward.

Q27. Strike out the incorrect statement.

a. The vertical distance between TC and TVC represents the AFC.

b. The TVC curve is an inverse S-shaped curve.

c. The total variable cost will increase with an increase in the level of output.

d. TVC is zero at zero levels of output.

Ans:

a. The vertical distance between TC and TVC represents the AFC.

Explanation: The vertical distance between TC and TVC represents TFC as TC –TVC = TFC.

Q28. How is the demand for a commodity affected by an increase in the price of its complementary good?

Ans:

Complementary goods are those that are used together to satisfy a given human want, e.g., a pen and a refill. When the price of a pen increases, it leads to a decrease in demand for refills. The consumer will be ready to purchase a lower quantity of the commodity (refill) at a given price, which is represented by a leftward shift in the demand curve for the commodity (refill).

Q29. Explain the concept of total utility and marginal utility with the help of an example.

Ans: Total Utility :- Total utility is defined as the total psychological satisfaction derived from the given stock of the commodity consumed. It can be estimated as the sum total of marginal utilities derived from the commodity.

TU = ΣMU

Marginal Utility :- Marginal utility is defined as the utility derived from the additional unit of the commodity consumed. It can be estimated as the change in TU due to change in one unit of the commodity consumed.

MU_n = TU_n – TU_{n – 1}

For example if the first unit of the commodity gives a satisfaction of 20 utils and the second unit of the commodity gives us 15 utils of satisfaction. Hence the total utility derived from 2 commodities will be 35 utils and the marginal utility for 2nd unit will 15 utils.

Q30. Distinguish between the marginal rate of substitution and the market rate of exchange.

Ans:

Q31. Differentiate between oligopoly and monopoly.

OR

What are the characteristics of Monopolistic Competitive?

Ans:

OR

Monopolistic competitive markets have the following characteristics:​

• There are many producers and many consumers in a given market.
• Consumers have clearly defined preferences, and sellers attempt to differentiate their products from those of their competitors; the goods and services produced in this market structure are differentiated but are close substitutes for one another.
• There are no barriers to entry or exit.
• Producers have some degree of control over the prices of their products, but not complete control.

Q32. Why is the short-run average cost curve U-shaped? Give reasons? ​

Ans:

The cost per unit of output is the average cost. It can be obtained by dividing the total cost by the unit of output. The average cost curve is U-shaped in the short run because laws of variable proportion operate in the economy. According to this law, initially the law of increasing return (i.e., decreasing cost) applies, then the law of constant return (i.e., constant cost), and finally the law of diminishing return. It means as output is increased, AC initially falls, reaches its minimum, and then rises. Hence the AC curve becomes U-shaped.

Q33. a. “A variable cost is a marginal cost.” Explain. [2]

b. Explain the production function. [2]

c. Explain the relationship between marginal and average products. [2]

OR

Distinguish between movement along the demand curve and shifting in demand curve.

Ans: a. The costs incurred on the variable factors of production are known as variable costs. The level of variable costs varies with the level of output. The marginal cost is the change in total cost due to the production of one additional unit. It also changes directly with the output and has no relation to the fixed cost. Thus, the marginal cost is also a variable cost.

b. The production function represents the technological relationship between the physical input and output of a product. In other words, it demonstrates that we can produce a lot with a given level of technology and during a specific time period. Symbolically, the production function can be written as follows:

Q = f ( L, K )

where L is land, K is capital

Generally, land, labor, capital, and entrepreneurship are the factors of production used in the production process.

c. The marginal physical product of a factor will change at different levels of output that factor. The relationship between MPP and APP can be explain as under –

(1)  In the situation where MPP>APP, the APP will rise.

(2)  When MPP=APP, the APP will be maximum.

(3)  When MPP < APP, then APP is falling.

OR

Q34. Explain how the change in supply affect the market equilibrium?

Ans: Suppose, initially, the market is in equilibrium at point E where the market demand curve DD₀ intersects the market supply curves SS₀ such that the equilibrium price is P₀ and the equilibrium quantity is Q₀.

Now, suppose due to some reason, the market supply curve shifts leftward to SS₂ with the demand curve remaining unchanged, as shown in following diagram. Because of the shift, at the prevailing price, P₀, there will be excess demand equal to Q₀’’Q₀ in the market. Some consumers who are unable to obtain the good will be willing to pay higher prices and the market price tends to increase. The new equilibrium is attained at point E₂ where the supply curve SS₂ intersects the demand curve DD₀ such that Q₂ quantity will be bought and sold at price P₂.

Similarly, when supply curve shifts rightward, as shown in following diagram, at P₀ there will be supply excess of goods equal to Q_0­Q₀’. In response to this excess supply, some firms will reduce their price and the new equilibrium will be attained at E₁ where the supply curve SS₁ intersects the demand curve DD₀ such that the new market prices is P₁ at which Q₁ quantity is bought and sold.

Notice the direction of change in price and quantity are opposite whenever there is a shift in supply curve.